Bill Ackman on MSFT, AMZN and META: Why Big Tech's Trillion-Dollar AI Spend Is 'Offensive Rather Than Defensive'

Bill Ackman‘s Pershing Square Inc. (NYSE:PS) has said that the artificial intelligence (AI) capital expenditures by Microsoft Corp. (NASDAQ:MSFT), Amazon.com Inc. (NASDAQ:AMZN), and Meta Platforms Inc. (NASDAQ:META) are designed to accelerate growth.

In a recent shareholder letter, the executives described the projected trillion-dollar outlay by major technology companies as “offensive rather than defensive.”

Deploying Capital for Growth

Addressing investor concerns regarding the returns on elevated spending by the hyperscalers, Chief Executive Officer William Ackman and Chief Investment Officer Ryan Israel wrote, “We believe that the hyperscalers’ capital spending is offensive rather than defensive.”

The executives stated that “Rather than merely protecting existing franchises, we believe the hyperscalers are investing to accelerate growth and are deploying capital behind a transformative technology that plays directly to their competitive advantages.”

Stock-Specific AI Strategies

The letter detailed how these investments are impacting specific portfolio companies. Regarding AMZN, the executives wrote that “Amazon is extremely well positioned across the AI stack.” They noted that “AI has helped AWS accelerate its revenue growth to 39% in the third quarter.”

For META, the letter stated that “Meta’s core digital advertising business has effectively used AI for better ad targeting, generative ad copy, and more effective content recommendation.”

Ackman and Israel also noted, “By frontloading its compute investment, Meta has given itself the optionality to scale Muse to a billion or more users.”

Regarding MSFT, the executives stated, “Microsoft occupies an enviable position among the hyperscalers in having two large channels by which to monetize its compute.” They noted that “the narrative on the stock has shifted from the company being an AI laggard to an AI leader.”

‘Disconnected’ Valuations at Uber and Netflix

Beyond the hyperscalers, Ackman and Israel highlighted what they view as mispriced opportunities in other portfolio companies. Regarding Uber Technologies Inc. (NYSE:UBER), the executives noted the stock now trades at “its lowest valuation ever.”

They stated that investor concerns regarding autonomous vehicles are “increasingly disconnected from its strong business performance.” Ackman and Israel wrote that “the risk due to AVs is minimal,” and projected that Uber’s earnings per share will “compound at 25% or more for the foreseeable future.”

Addressing Netflix Inc. (NASDAQ:NFLX), the letter noted that recent stock declines were driven by investor concerns over plateauing engagement. However, the executives argued that measuring engagement solely by watch time “overshadows the quality of that engagement, which is what ultimately drives the value proposition for Netflix subscribers.” Ackman and Israel concluded that the market “vastly undervalues the company’s growth profile and business quality.”

Hyperscalers Can Fund Most of the Buildout

The letter acknowledged concerns over how these companies will fund their infrastructure buildout. Ackman and Israel noted that the hyperscalers are “collectively expected to spend a little over $1 trillion on capital expenditures in 2027 based on consensus estimates.”

However, the executives concluded that “The hyperscalers are in a vastly stronger financial position,” adding that they “can finance the substantial majority of their capital expenditures from the prodigious cash flows of their core businesses.”

How Have These Stocks Performed?

Stocks	1-Month	6-Months	YTD	1-Year	5-Years
NFLX	-7.64%	-31.51%	-33.51%	-43.33%	-3.45%
AMZN	2.30%	-9.71%	6.42%	-3.30%	39.60%
MSFT	-3.44%	22.61%	4.86%	-1.92%	50.90%
META	-18.22%	-0.60%	-8.08%	-4.86%	77.86%
UBER	-3.99%	-9.77%	-18.36%	-33.10%	41.36%

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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