Legendary investor Bill Ackman has positioned the Pershing Square Capital portfolio to include several Magnificent Seven stocks that are benefitting from artificial intelligence and may be undervalued by investors.
Here’s Ackman’s top stock picks and a software stock he told investors he would avoid.
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Ackman on AI Opportunity
Over the last year, Ackman has bought stock in Microsoft Corp (NASDAQ:MSFT), Meta Platforms Inc (NASDAQ:META) and Amazon.com Inc (NASDAQ:AMZN).
Those three Magnificent Seven stocks are among Ackman’s favorite bets on AI growth.
Speaking at a recent event hosted by the “All-In Podcast” team, Ackman said the risk of disruption from AI has gone up “dramatically.”
“You’re either directly or indirectly invested in AI, or it’s a threat, so you have to understand it,” Ackman said.
Ackman said one of the hardest things as an investor is to understand what companies will benefit from a trend like AI without chasing after high-growth names.
The investor said people bring eyes to new things and chase with their capital, leaving “high-quality stuff” behind.
Ackman compared the current market to 2000, when people got excited about internet stocks and value names such as Berkshire Hathaway got left behind, trading at low valuations.
He said a similar thing is happening to Amazon, Meta and Microsoft today, betting the capital of his hedge fund that those stocks will rise in the future.
As for startups in the world of AI, Ackman said it’s a great time with unlimited access to compute, capital and talent.
“This is the greatest era in history to build a business.”
Ackman on Software Concerns
During his interview, Ackman was also asked about the sell-off in software stocks, which some refer to as the “SaaSpocalypse.”
The sell-off hit companies that count on revenue per seat or customer the hardest.
Ackman said some software companies have been selling their products and platforms for high prices per customer and now face the risk of losing partners.
“I worry more about a Salesforce,” Ackman said of Salesforce (NYSE:CRM).
Ackman said that Salesforce and others are now at risk of losing customers.
Image created using artificial intelligence via Midjourney and Dall-E.
