Does Bill Ackman think AI hyper-scalers are overvalued? No. Ackman believes demand for AI computing power is sustainable rather than a bubble, and he views Amazon and Microsoft as still cheap because their core businesses benefit directly from frontier computing.
There has been plenty of debate about stretched market valuations and whether the Magnificent Seven can actually profit from their extraordinary AI spending spree. From that perspective, it may surprise many investors that Pershing Square’s Bill Ackman believes some of these hyper-scalers are actually looking cheap.
The billionaire hedge fund manager is famous for his long-running short position against bond insurer MBIA, which paid off handsomely during the Global Financial Crisis, and for activist campaigns at companies such as J.C. Penney and Canadian Pacific Railway that pushed for leadership change. Ackman has also suffered significant losses, most notably on his short position against Herbalife.
These days, Ackman is more focused on long-term investing in what he describes as ‘super durable companies with big moats.’ He shared his views on markets, and on where he is investing, in a recent interview shown at Equity Mates’ FinFest in Sydney.
Bill Ackman at a glance: the trades that defined him
Period | Position | What happened |
2002–2008 | MBIA (short) | Long-running bet against the bond insurer that paid off handsomely during the Global Financial Crisis. |
2010–2013 | J.C. Penney (activist) | Pushed for new leadership; the turnaround failed and Ackman exited at a loss. |
2011–2012 | Canadian Pacific Railway (activist) | Won a proxy fight that overhauled the board and management. |
2012–2018 | Herbalife (short) | High-profile short position that ended in significant losses. |
2020 | COVID-19 credit hedge | Turned a roughly US$27 million hedge into about US$2.6 billion. |
2026 | Pershing Square Inc. IPO | Pershing Square Inc. (PS) and Pershing Square USA (PSUS) listed on the NYSE in April. |
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AI has been the dominant theme in markets and the driver behind the Magnificent Seven’s meteoric gains. With valuations near record highs and borrowing to fund AI development at extreme levels, some market commentators have asked whether we are in a bubble – and whether this is the dotcom bubble all over again.
Ackman disagrees, arguing that demand for computing power and superintelligence is approaching the infinite.
“I’m a big believer in being long compute as a good trade.
— Bill Ackman, Pershing Square
His portfolio backs this up, with significant holdings in Amazon, Microsoft and Meta.
He recently sold Alphabet after its share price reached a level that met Pershing Square’s long-term targets. The fund sold about 95% of its stake in the first quarter of 2026 and the remainder in the second, with Ackman stressing the move was not a bearish call and redirecting the capital into Microsoft.
Beyond valuations, concerns have grown about the power and future of AI, with technology and AI leaders including Elon Musk, Sam Altman and Dario Amodei calling for greater regulation of the technology and, in some cases, a slowdown in its development.
Ackman acknowledged the challenges, noting: ‘I don’t think we quite know where we’re headed, and the more frightening part is that the people who actually work for these companies don’t understand exactly how the models are learning.’
‘The way we’ll save ourselves from AI is probably a better AI,’ he said, suggesting that a forced slowdown would not deliver the hoped-for benefits.
The heavy spending on AI development is often cited as a factor adding to inflation, and as a reason for analysts to worry about the earnings potential of some of the world’s biggest companies.
Ackman suggests that we are witnessing a prolonged shift in demand rather than a temporary spike.
‘Amazon and Microsoft were never capital-light businesses,’ he notes, arguing that demand is sustainable and that, because it is so difficult to build enough capacity to meet it, this in itself creates a moat.
“The Amazons and Microsofts of the world also have a benefit because they’re not pure-play hyper-scalers. They have core businesses that […] use computing, where being at the frontier is going to be very valuable for the core businesses.
— Bill Ackman
Ackman views both stocks as still cheap, and his view aligns with Morningstar’s research. The research house puts fair value for Amazon at US$300 and for Microsoft at US$600, both comfortably above their share prices on 23 October 2026.
Whether or not you believe markets are at their peak, Ackman does not advocate waiting on the sidelines for conditions to change, citing the opportunity cost of doing so.
He favours a consistent approach that prioritises long-term compounders over rapid growth – businesses he describes as ‘super durable growth companies with wide moats’. In his view, the most important question every investor should ask before investing in a company is:
“What’s the risk this business is disrupted by a 19-year-old who left Stanford to found a company?
— Bill Ackman
He likes franchises that are difficult to disrupt, that have become an essential part of daily life or doing business, or that stand to benefit from disruption.
Uber is a case in point. The company is widely seen as facing a threat from autonomous vehicles, but Ackman believes it is well positioned to become a platform for many autonomous vehicle operators – since not every car maker will have its own platform – and to capitalise on demand for transport.
Valuation still matters to Ackman. He maintains a watchlist of hundreds of stocks he has analysed over the years, waiting for the point at which each becomes attractive enough for his portfolio.
He also aims to get a feel for a company’s chief executive, comparing what a CEO said on first joining with what they later delivered, and judging whether they tend to be conservative or ambitious in what they promise shareholders.
Ultimately, Ackman encourages investors to take a long-term view: buy attractive, high-quality businesses and hold them for long enough for returns to compound.
The Ackman checklist: six tests for a ‘super durable’ business
1 | A wide moat Competitive advantages that are hard for rivals to replicate. |
2 | The Stanford test Could a 19-year-old start-up founder disrupt this business? |
3 | An essential franchise Part of daily life or doing business – or positioned to benefit from disruption. |
4 | Price discipline Keep a watchlist and buy only when valuations become attractive. |
5 | A CEO who delivers Compare early promises with later results, and gauge whether management is conservative or ambitious. |
6 | Stay invested Waiting on the sidelines carries an opportunity cost; let quality compound. |
Pershing Square offers publicly listed vehicles on the London Stock Exchange (Pershing Square Holdings, PSH) and the New York Stock Exchange (Pershing Square USA, PSUS, and the manager itself, Pershing Square Inc., PS), and its investments are US-centric. Australian investors can, however, consider local managed options that follow a similar high-quality, wide-moat philosophy.
On the passive side, the VanEck Morningstar Wide Moat ETF (ASX: MOAT) tracks a Morningstar index of US companies with wide economic moats, while the VanEck Morningstar Wide Moat (AUD Hedged) ETF (ASX: MHOT) tracks the same US index with returns hedged into Australian dollars. Both are broad-based index approaches that apply quality and moat filters.
You could also consider active managers with a focus on quality, such as Claremont Global (see the Claremont Global Fund Active ETF, ASX: CGUN), Aoris Investment Management (see the Aoris International Fund Class B, ASX: BAOR) and Hyperion Asset Management (see the Hyperion Global Growth Companies Active ETF, ASX: HYGG). There are plenty of others to consider. Note that while there may be some crossover with Pershing Square’s holdings, none of these funds tracks its portfolio or will be an exact match.
Fund | ASX code | Style | What it offers |
MOAT | Passive | Tracks the Morningstar Wide Moat Focus Index of attractively priced US companies with sustainable competitive advantages. | |
MHOT | Passive | The same US wide-moat index, with returns hedged into Australian dollars. | |
CGUN | Active | Concentrated portfolio of high-quality global businesses. | |
BAOR | Active | Quality-focused international equities manager. | |
HYGG | Active | High-quality global growth companies held for the long term. |
Many active and passive funds already have large allocations to hyper-scalers, particularly the Magnificent Seven. If you want to follow Ackman’s conviction on AI, cross-check your existing holdings first to avoid becoming overly concentrated in this sector or in just a handful of stocks.
Q Who is Bill Ackman?
Bill Ackman is a billionaire American hedge fund manager and the founder and chief executive of Pershing Square Capital Management, which he launched in 2004. He is known for activist investing and for high-profile trades, including his bet against MBIA and his short position against Herbalife.
Q What is Bill Ackman’s investment philosophy?
Ackman buys high-quality companies with wide moats – strong competitive advantages that are difficult for rivals to replicate – at reasonable valuations. His portfolio is concentrated and high-conviction. He has also been known for activist investing, where an investor seeks to unlock hidden value in a company through advocacy and management change.
Q Does Bill Ackman think AI is a bubble?
No. Ackman argues that demand for computing power is effectively limitless and describes being ‘long compute’ as a good trade. He sees a prolonged structural shift in demand rather than a temporary spike.
Q Which hyper-scalers does Bill Ackman own?
Pershing Square holds significant positions in Amazon, Microsoft and Meta. It sold almost all of its Alphabet stake in the first quarter of 2026 and exited the remainder in the second quarter, redirecting capital into Microsoft.
Q Why does Ackman think Amazon and Microsoft are cheap?
Unlike pure-play hyper-scalers, Amazon and Microsoft have large core businesses that use computing themselves, so being at the AI frontier adds value to those businesses as well as to their cloud divisions. Because building enough capacity to meet demand is difficult, he believes this also creates a moat.
Q What approach does Bill Ackman suggest for retail investors?
Ackman suggests retail investors focus on long-term investing in super-durable, high-quality businesses with a moat: companies with established and diversified revenue streams, a proven ability to perform across market cycles and the capacity to keep competing in future. Investors should maintain a watchlist, aim to buy at attractive valuations and always consider the probability of a business being disrupted.
Q How can Australian investors invest like Bill Ackman?
Pershing Square’s listed vehicles trade in London and New York. Locally, investors can consider wide-moat ETFs such as VanEck’s MOAT and MHOT, or quality-focused active managers such as Claremont Global, Aoris and Hyperion. None of these tracks Pershing Square’s portfolio.
Q What is an economic moat?
An economic moat is a durable competitive advantage – such as a strong brand, network effects, high switching costs or cost advantages – that protects a company’s profits from competitors over the long term.
MOAT gives investors exposure to a diversified portfolio of attractively priced US companies with sustainable competitive advantages according to Morningstar’s equity research team. This fund aims to provide investment returns before fees and other costs which track the performance of the Index.
MHOT gives investors exposure to a diversified portfolio of attractively priced US companies with sustainable competitive advantages according to Morningstar’s equity research team. MHOT aims to provide investment returns before fees and other costs which track the performance of the Index with returns hedged into Australian dollars.
The Fund’s objective is to provide an attractive risk-adjusted return in excess of the Benchmark over a rolling 5-7 -year period.
The Fund will invest in a concentrated portfolio of 10 – 15 stocks drawn from international equity markets outside Australia.
The Hyperion Global Growth Companies Fund – Active ETF seeks to achieve long-term capital growth by investing in what we believe are high calibre companies primarily listed on a recognised global exchange, at the time of investment.
Disclaimer: This article is prepared by Simon Turner. It is for educational purposes only. While all reasonable care has been taken by the author in the preparation of this information, the author and InvestmentMarkets (Aust) Pty. Ltd. as publisher take no responsibility for any actions taken based on information contained herein or for any errors or omissions within it. Interested parties should seek independent professional advice prior to acting on any information presented. Please note past performance is not a reliable indicator of future performance.
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