Billionaire hedge fund manager Bill Ackman has made a significant move in his investment portfolio by adding Alphabet Inc. shares as his largest holding. This move comes as Ackman continues to maintain his reputation for long-term investments in high-quality companies. The addition of Alphabet stock now represents 22% of his $11 billion portfolio.
Alphabet, the parent company of Google, saw its stock trading at a low multiple of just 15 times earnings, marking one of its lowest valuations in over a decade. This attractive valuation caught Ackman’s attention amid an advertising slump that impacted the company’s revenue in the previous quarter.
However, Alphabet’s fortunes quickly turned around, with revenue growth rebounding in the first quarter of the year. The company’s advertising revenue increased, and its diluted earnings per share saw a significant surge. Ackman highlighted the strength of Google Search and YouTube, as well as the growth potential of Google Cloud, in Alphabet’s business.
Moreover, Alphabet’s continued investment in artificial intelligence (AI) has positioned the company as a leader in the industry. Recent developments at the Google I/O 2024 conference showcased Alphabet’s commitment to AI innovation, enhancing products like Google Search and other services with over 500 million users each.
The stock market performance of Alphabet has been impressive since its IPO in 2004, with returns of over 8,000%. Despite the recent rebound in its stock price, Alphabet remains attractively priced compared to the broader market, trading at a discount to the S&P 500. The company’s history of outperforming the market over the past decade further solidifies its position as a compelling investment opportunity.
As Bill Ackman continues to demonstrate his preference for long-term investments in high-quality companies, Alphabet stands out as a key holding in Pershing Square’s portfolio. With its strong financial performance, growth prospects, and leadership in AI technology, Alphabet remains a stock worth watching for investors seeking exposure to innovative tech companies.
