Billy Ackman just bought $2 billion worth of Meta shares. His fund, Pershing Square, made it official this week. That one bet now makes up 10% of the entire fund.
“We believe Meta’s current share price underappreciates the company’s long-term upside potential from AI and represents a deeply discounted valuation for one of the world’s greatest businesses,” Pershing Square wrote in its annual investor letter.
Meta stock fell 0.8% on Wednesday, but Billy clearly doesn’t care. He’s calling the whole thing a massive opportunity.
Over the past year, Meta shares have dropped 16%. That’s mostly because investors are stressed about Meta spending billions on artificial intelligence.
In its last earnings report, Meta said it plans to spend between $115 billion and $135 billion on AI-related projects in 2026. That’s a huge jump, and it made people nervous. But not Billy.
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Pershing Square lays out Meta thesis in full detail
“We believe concerns around META’s AI-related spending initiatives are underestimating the company’s long-term upside potential from AI,” the firm wrote. Billy’s team sees all that AI spending as a smart play, not a problem.
Meta is currently trading at $677 per share, with a total market value of $1.7 trillion. It runs two parts: the Core Family of Apps and Reality Labs. The first group includes Facebook, Instagram, and WhatsApp, and that’s where most of the money comes from.
The second group is all the wearables and virtual reality stuff, which is still losing money. Right now, Reality Labs accounts for about 25% of the total losses in the business.
Despite that, Meta’s overall numbers are strong. It pulled in $200 billion in revenue in 2025, which was up 22% from the year before. The daily user base sits at 3.5 billion people and grew by 7% in the last quarter.
That’s massive. Even more important, it shows the company still knows how to keep people hooked.
Billy and his team say Meta’s ad model has real power. With more people using the apps every day, ad placements keep going up in value. Advertisers can target users based on behavior and interests. That’s what makes Meta so profitable. And now, with AI, they believe things can get even better.
The investor letter listed several ways AI will help Meta. Content recommendations will get smarter. Ads will become more personalized. Advertisers will be able to use AI tools to create their own campaigns.
Even digital assistants could be added for business users. Pershing Square believes all this opens the door to even more use cases.
Billy’s team also pointed out that Meta has already been cutting costs. In 2023, they called it the “Year of Efficiency.”
And just recently, the company reduced spending on Reality Labs. That’s where all the losses have been. They believe the company is showing discipline, even while spending big on AI.
They also think the core business is strong enough to handle extra spending.
If there’s any overbuilding, they believe Meta can grow into it. They say the company has the financial flexibility and enough users to absorb that kind of investment.
Meta is trading at 22 times forward earnings. But when you take out the Reality Labs losses, that number drops. Billy and his fund believe the rest of the market is missing this.
