Ackman "Switches Holdings" to AI Giants: Sells All Alphabet (GOOGL.US) Shares, Increases Meta (META.US) Holdings—Should Investors Follow?

According to Zhitong Finance APP, Pershing Square Capital Management, helmed by billionaire and legendary hedge fund manager Bill Ackman, has been making notable moves this year: in Q1, it significantly reduced its holdings in Google parent company Alphabet (GOOGL.US, GOOG.US), and completely exited the remaining shares in Q2. Ackman made it clear that this was not a bearish stance on Alphabet, but rather a decision to allocate capital to other, more attractive opportunities at the current valuation.

He purchased another AI-related tech giant, Meta Platforms (META.US), which at the time was down about 15% from its peak. Was this an astute move for Ackman and Pershing Square? Can investors learn from this? The answer may lie in market performance, valuation, and AI strategies.

Early Success from Rotation Among Tech Giants

In Q2, Pershing Square increased its holdings in Meta by about 20%. This is not a small investment. When Ackman exited Alphabet and shifted to Meta and other stocks, the market interpreted this as Pershing Square believing that the best near-term buying opportunity for Alphabet had passed.

Judging from Q3 stock price performance, Ackman may have been correct. Since the end of Q2, Meta has returned more than 19%, while Alphabet has left investors with losses.

This sentiment shift may be related to the recent successful AI product launches by Meta. One of Meta’s most successful AI products to date is its personal AI assistant, Muse. This platform has been a long-term commitment for Meta, and the initial response has far exceeded expectations. Muse can handle shopping, manage user calendars, and help users set goals, among other tasks. Although Muse does not currently generate direct revenue through usage fees or subscriptions, it keeps users more deeply engaged in the Meta ecosystem, and once users become accustomed to it, future monetization becomes possible.

Alphabet has not brought investors any exciting breakthroughs in recent months, which may explain its subdued stock performance. While Pershing Square’s trades occurred months ago, Ackman is known as a long-term investor, so his moves are still worth analyzing after some time has passed.

This raises the question: is such an investment still the right choice today?

Meta Remains Attractively Valued

Despite its 19% surge this quarter, Meta remains cheaper than Alphabet. Part of this gain can be attributed to a shift in market sentiment from extreme pessimism to optimism, driving up the stock price. The market remains highly bullish on Alphabet, so its valuation is relatively higher.

Currently, Alphabet’s P/E ratio is distorted by its massive investment gains; however, if investors use 2027 earnings forecasts, this distortion disappears. From this perspective, Meta is still cheaper.

The Motley Fool analyst Keithen Drury notes that although Meta’s recent rally has narrowed the gap somewhat, buying Meta at 19.5 times next year's expected earnings is not expensive, so there may still be time to get in before this rally ends. However, given the market’s declining attention to Alphabet, this may also be an excellent time to buy Alphabet stock, as it is poised for explosive growth if a successful new product emerges. In addition, Alphabet’s significant investment in Anthropic is about to pay off. This could bring in returns in the hundreds of billions for Alphabet and provide more cash to expand its AI portfolio.

In The Motley Fool’s view, both of these stocks are worthy of allocation today. If Meta can maintain its current momentum, its rally could continue into the end of the year; Alphabet, meanwhile, may be a “sleeping giant,” with a subdued first half potentially leaving room for a strong second half. Both are stocks worth watching for 2027, and positioning now could lead to market-beating returns in the future.

TipRanks data shows that Wall Street analysts remain broadly bullish on these two tech giants, giving both Alphabet and Meta a “Strong Buy” rating. The average target price for Alphabet is $429.31, 23% higher than the latest closing price;

Meta’s average target price is $759.43, 14% higher than the latest closing price.