Ackman’s AI Gambit: A Modern Hathaway?

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The universe, as anyone who’s accidentally glanced at a spreadsheet knows, is a profoundly improbable place. And yet, here we are, observing a billionaire attempting to recreate Warren Buffett’s success – a feat roughly equivalent to teaching a goldfish to play the ukulele. Bill Ackman, the gentleman in question, is aiming to transform Howard Hughes Holdings into something resembling Berkshire Hathaway, a company that, let’s face it, looks suspiciously like a very large, well-organized collection of stuff. His initial foray involves acquiring Vantage Group, a specialty insurance and reinsurance firm, which is, in the grand scheme of things, a bit like rearranging the deck chairs on the Titanic, but with slightly more actuarial tables.

The logic, as best one can decipher it (and frankly, the deciphering process involves a concerning amount of caffeine), is that insurance companies generate capital that can then be deployed into other ventures. This is not a new idea. It’s been done before. Many times. But Ackman, bless his ambitious soul, seems to believe he can do it better. (A common delusion amongst the financially fortunate, and indeed, a significant driver of economic activity.) His hedge fund, Pershing Square Capital Management, has a reasonably encouraging track record – beating the S&P 500 by a respectable 40 percentage points over the last decade. Which, if you consider the inherent randomness of the stock market, is either impressive or simply a statistical anomaly. The jury, as they say, is still out, and probably ordering another round of drinks.

Currently, a rather substantial 55% of Pershing Square’s assets are allocated to four artificial intelligence stocks. This, in itself, isn’t necessarily alarming. (Unless you subscribe to the theory that AI will inevitably achieve sentience and enslave humanity, in which case, everything is alarming.) But it does indicate a certain conviction – or perhaps a lack of diversification, depending on your perspective. Let’s examine the holdings:

  1. Uber Technologies (UBER +2.62%): Accounts for 16% of the portfolio. Wall Street’s collective wisdom (a notoriously unreliable source, mind you) suggests a potential 46% upside from its current price of $73, reaching $105. Uber, of course, is the company that perfected the art of summoning a vehicle with a smartphone, a service that simultaneously solves a transportation problem and induces existential dread about the future of employment.
  2. Amazon (AMZN 1.31%): Constitutes 14% of the portfolio. The Street anticipates a 36% increase, bringing the price to $285 from $209. Amazon, the everything store, is now attempting to become the everywhere store, leveraging AI and robotics to optimize logistics and dominate retail. (It’s a bit like watching a particularly efficient amoeba consume the planet.)
  3. Alphabet: Another 14% allocation. A projected 23% upside from $312 to $385. Alphabet, the parent company of Google, is attempting to organize all the world’s information and make it universally accessible and useful. (A noble goal, perhaps, but also a terrifying amount of power.)
  4. Meta Platforms: 11% of the portfolio. A potential 31% increase from $650 to $850. Meta, formerly Facebook, is attempting to build the metaverse, a digital world where people can interact with each other and with virtual objects. (The precise purpose of this endeavor remains… unclear.)

While a diversified portfolio is generally considered prudent, Ackman seems particularly bullish on Uber and Amazon. Let’s delve into the rationale behind these choices.

Uber Technologies: The Robotaxi Gambit

The investment thesis, as far as one can discern, is that Uber is uniquely positioned to capitalize on the coming wave of autonomous vehicles. The company operates the largest ridesharing and food delivery platform globally, making it an ideal partner for any company developing self-driving technology. Uber hopes to deploy 100,000 robotaxis by 2027, and become the leading facilitator of autonomous vehicle trips by 2029. (This assumes, of course, that we don’t all collectively decide that self-driving cars are a terrible idea and revert to horse-drawn carriages.)

Currently, Uber collaborates with Alphabet’s Waymo in Phoenix, Austin, and Atlanta, and with Avride in Dallas. In the Middle East, it partners with WeRide in Abu Dhabi, Dubai, and Riyadh, with plans to expand to 12 more cities by 2030. Furthermore, Uber works with Nvidia to provide data and infrastructure for autonomous vehicle development. The company is also introducing fleet operations services to address telemetry, remote assistance, and insurance needs. Plans are underway to expand to markets like Los Angeles, San Francisco, and London. (A truly global network of automated transportation. What could possibly go wrong?)

Ackman anticipates adjusted earnings growth of over 30% annually for several years, slightly more optimistic than the Street’s consensus of 25%. However, at 15 times earnings, the current valuation appears attractive in either scenario. (Assuming, of course, that the earnings projections aren’t based on a fundamentally flawed understanding of reality.)

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Amazon: The Everything-Store-That-Also-Does-Everything-Else

Amazon, as anyone who has ever ordered something online knows, has the largest online marketplace in North America and Western Europe. The company is now leveraging AI and robotics to enhance its retail operations and increase profitability. (It’s a bit like watching a highly efficient, digitally-powered octopus slowly engulfing the global economy.)

Amazon has developed hundreds of generative AI applications to optimize demand forecasting, inventory placement, workforce productivity, and last-mile delivery routes. It’s also the largest operator of industrial mobile robots and has developed an AI model to expedite robot navigation. (The robots, presumably, are plotting their takeover in their spare time.)

Amazon Web Services (AWS) dominates the cloud infrastructure and platform services space with 41% market share, giving the company a clear advantage in monetizing AI demand. AWS is where most companies’ data and workloads reside, making it the natural choice for running AI applications. (It’s a bit like building a digital fortress around the world’s information.) AWS has also developed custom chips (now a $10 billion business) and serves as the primary cloud provider for Anthropic.

Some investors are concerned about Amazon’s substantial AI investments, but those investments are already bearing fruit. In the fourth quarter, operating margin increased 1.5 percentage points, and AWS revenue grew 24%, the fastest growth since 2022. At 29 times earnings, the current valuation appears attractive for a company expected to grow earnings by 17% annually over the next three years. (Assuming, of course, that the universe doesn’t decide to throw a wrench into the gears of progress.)

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2026-02-27 11:23