Bill Ackman is outspoken. He's passionate. And he's one of the wealthiest people in the world, with a net worth of over $9 billion.
Ackman doesn't talk much about artificial intelligence (AI), but that doesn't mean he isn't interested in profiting from the game-changing technology. Here's Ackman's favorite AI stock -- and why it's a no-brainer buy for 2025.
We don't have to scrutinize Ackman's investments and public comments to pick his favorite AI stock. His Pershing Square Capital Management hedge fund owns only 10 stocks. Two of them focus on AI -- and they belong to the same company -- Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL).
At the end of the third quarter of 2024, Pershing Square owned 7.55 million Alphabet Class C shares and 3.99 million Alphabet Class A shares. Together, the two stocks made up roughly 14.9% of the hedge fund's total portfolio.
Ackman first initiated a position in Alphabet in early 2023 when OpenAI's ChatGPT was taking the world by storm. Alphabet's Google unit followed by introducing its first generative AI product, Bard. However, as Ackman told CNBC in a September 2023 interview, "Google really fumbled their offering."
Alphabet's shares sank after the public relations black eye experienced with Bard's launch, and Ackman took advantage of the opportunity to load up on the stock. He told CNBC that Google "will be a dominant player in AI for the very, very long term."
That was then. Alphabet stock has soared nearly 90% since the end of the first quarter of 2023 when Ackman first invested in it. Is it still a no-brainer buy as 2025 approaches? I think so.
For one thing, Alphabet's Google unit isn't fumbling and stumbling with its AI initiatives anymore. This month alone, Google has launched four powerful new AI products.
On Dec. 3, Google Cloud introduced the Image 3 image generation model and Veo video generation model on its Vertex AI platform. On Dec. 11, Google rolled out Gemini 2.0, its most powerful large language model (LLM) yet. One day later, it launched Google Agentspace, a new platform that enables customers to build and deploy AI agents that can automate business functions.
Unsurprisingly, Google Cloud's business is booming. In Q3, the unit's revenue jumped 35% year over year to $11.4 billion. Google Cloud should have tremendous growth prospects as more organizations migrate to the cloud over the next decade, with AI accelerating this shift.