Billionaire Bill Ackman Dumps Alphabet and Loads Up On a Mega-Cap Stock Down 15% From Its Peak

Bill Ackman runs Pershing Square Capital Management, and the investment firm made some interesting investment moves this year. During Q2, Ackman sold off the remainder of Pershing Square's Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) stake. This was after buying into Alphabet in Q1. Considering how successful an investment Alphabet has been over the past year and how rapidly it's growing thanks to its artificial intelligence (AI)-related efforts, this move is a bit of a head-scratcher.

However, Ackman didn't sit idle with his money. Instead, he purchased shares of another AI-related tech giant trading down about 15% from its peak: Meta Platforms (NASDAQ: META). Was that the right move for Ackman and Pershing Square ? Should you follow Ackman's lead here? Let's take a look.

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This tech giant swap is starting to pay off

During Q2, Pershing Square increased its stake in Meta Platforms by about 20%. That's no small investment, and when it exited Alphabet in favor of other stocks like Meta, it was interpreted as a sign that Pershing believes Alphabet's best buys (at least in the short term) are behind it.

Judging by the stocks' performance in Q3, Ackman might have been right. Meta has returned over 19% since Q2 ended, while Alphabet has lost investors' money.

This change in sentiment could be tied to enthusiasm for Meta Platforms' recent successful AI product launches. One of the most successful AI product launches to date is Muse, its personal AI agent. This platform has long been promised by Meta, and its initial reception has far exceeded expectations. It can do tasks like shopping, managing a user's calendar, and helping the user set goals. While there isn't any direct revenue associated with Muse via use fees or a subscription, it keeps users tied to the Meta ecosystem and could eventually be monetized once users have become accustomed to using it.

Alphabet really hasn't had anything groundbreaking for investors to get excited about in recent months, which could be why its share performance has been flat. While Pershing Square's stock transactions took place several months ago, Ackman is considered a long-term investor, so his moves can be analyzed for months after they actually happened.

Which raises the question: Is this still the right investment to make today?