High Conviction Investments: Ackman Buys META + Adds to AMZN

When Bill Ackman makes a move, it’s rarely a small starter position. Pershing Square runs a concentrated portfolio, so new buys and big adds are basically the fund saying: this is a high conviction bet. These were his two big moves to end 2025.

Meta Platforms (META) - NEW BUY

• % of portfolio: 11.37%
• Reported price: $625
• Position value: $1.765B

Amazon (AMZN) - ADDED +65%

• % of portfolio: 14.28%
• Reported price: $215
• Position value: $2.218B

So combined, META + AMZN = 25.65% of the portfolio. That’s the whole point: Ackman concentrates where he believes the odds are best.

Why Meta?

In Pershing Square’s most recent report published in mid-February Ackman laid out four core reasons why they chose to deploy capital into Meta, so let’s break it down.

Reason #1: A high-quality ad model with increasing returns at scale. Their view is that engagement scale improves the platform for users and advertisers, and that Meta’s data improves ad targeting and ROI.

Reason #2: In their opinion, Meta is a clear AI beneficiary. They highlight AI-driven recommendation systems improving engagement, and AI tools that improve advertising outcomes.

Reason #3: Long-term earnings growth after a planned spending ramp. They acknowledge heavier investment but argue that Meta has shown cost discipline and the core business can absorb investment. To them, overbuilding is not a risk because they can grow into capacity.

Reason #4: Meta’s balance sheet strength gives them flexibility. Ackmans emphasizes a cash-heavy balance sheet  and high-margin core business. He is basically saying that strong companies can invest through cycles without putting shareholders in a bind.

My Takeaway:

Ackman opened a new position in Meta because he believes the business will only improve as it scales, receive additional tailwinds from AI, and holds a significant moat. We are past the narrative that TikTok will disrupt the advertising giant. Another important note I would point out is that the AI capex doesn’t really concern me either because of the balance sheet strength and immense profitability. We saw Meta waste $10B per year on the Metaverse, if the company doesn’t directly see a high ROI from this capex then they can simply halt the spending. Yes cash flow will have been waste, but the cash flow generation remains strong. I find it odd that Ackman was not interested in Meta on the collapse from $340 to $88, but you will see in my stock analyzer that I don’t disagree that it looks interesting today.

The Right Price for Meta: Stock Analyzer

To make informed investment decisions, we shift to our stock analyzer, which allows us to estimate the intrinsic value of Meta based on various assumptions regarding revenue growth, profit margins, and price-to-earnings ratios. For this analysis, I chose revenue growth rates of 7%, 10%, and 13%, alongside profit margins of 29%, 31%, and 33%.

The fair value results are as follows:

• Low Price: $550
• Middle Price: $815
• High Price: $1205

In Ackman’s presentation he said their cost basis was $625, you can see based on pretty reasonable assumptions that would be a bit of a discount on the middle price. I’ve had a lot of great conversations around this stock with community members over recent months, a lot of individuals believed sub $600 was a strong point to be adding. Our average intrinsic value rating by 131 community members was $740.

Why Amazon?

Reason #1: AWS is the crown jewel, a leading cloud hyperscaler with significant demand. In Pershing Square’s most recent presentation they add that AI adoption potentially extends and accelerates AWS growth runway. In addition, they believe constraints of growth will be about capacity rather than demand. Finally, Amazon plans to double data center capacity through 2027 to meet demand.

Reason #2: Amazon core retail business is nearly impossible to displace. They call out Amazon.com as the largest global e-commerce retailer, supported by dominant market positioning and an unmatched logistics network. Most importantly however, the value is said to be unlocked by expanding retail margins through advertising and automation initiatives.

My Takeaway:

Ackman and Pershing Square have bet heavily on Amazon because they believe it is one of the highest quality companies in the world with an untouchable moat. If you were given $1T in starting capital today, I don’t believe you would displace Amazon. Their valuation likely builds in that between AWS expansion and retail margin growth, EPS will significantly outpace revenue in coming years. Finally, it is important that the heavy amount of growth capex Amazon conducts year after year continues to payoff with a strong ROI. Below is a breakdown of my stock analyzer on Amazon, which actually looks interesting and is worth more research.

The Right Price for Amazon: Stock Analyzer

For this specific analysis, I chose revenue growth rates of 7%, 9%, and 11%, alongside profit margins of 10%, 12%, and 14% based on past performance and outlook. Things I considered were current growth rates of the company as a whole and AWS specifically, how higher margin avenues will continue the expansion we have seen over recent years, and finally what a fair PE is at the end of a ten-year period.

The fair value results are as follows:

• Low Price: $164
• Middle Price: $254
• High Price: $380

Whether you agree with the concept or not, Buffett and Munger have said for decades to buy a great business at a fair price. Based on this analysis Amazon appears to not just meet that threshold, but be slightly undervalued. That may not be a reason to buy yet, but it is certainly a reason for us to do deeper research and have more discussion about it in the community.

Focus Areas For META + AMZN Investors

For those of you who have chatted with me regularly, you know I love reading quarterly and annual earnings reports. I have a notebook where I keep the key items I am watching for each company. For Meta the first one is how durable their ad revenue is across cycles. In addition to that how is their operating margin trending as revenue growth takes off. Do they maintain some form of structure on spending, so we don’t see more metaverse type events. Amazon I focus more on AWS growth and how operating margin trends relative to it, along with whether or not datacenter capex shows direct return on investment. Lastly just ensuring retail growth and profitability, it’s a massive business so even slight upward mobility in margins can make a big difference.

Final Thoughts

Here’s my honest final takeaways. Based on Ackman’s investment style I am not surprised at all to see him buying META and adding significantly to AMZN. I personally believe each business will be around for decades to come, and produce higher levels of profit as well.  It is going to be very important at current valuations that AI capex results in strong growth for years to come. If growth slows on these giants, multiples will contract further. That being said, there are no signs of growth slowing yet. Depending on the type of investor you are, your portfolio structure, and the returns you are looking to achieve these could be worth deeper research and consideration. They both optically appear to be trading at a small discount to fair value at the very least. So tag me in the community and let’s talk deeper about Ackman’s decision.

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