Pershing Square Inc. on Meta Platforms, Inc.
Thesis
Pershing Square believes Meta's substantial AI investment is an offensive growth strategy rather than merely defensive spending to protect its existing advertising franchise. AI-powered advertising optimization, content recommendations, and generative advertising tools have contributed to revenue acceleration, with growth expected to reach approximately 27% in 2026. Beyond advertising, the launch of the Muse personal agent and Meta Enterprise Platform creates opportunities to monetize AI across consumer transactions and business automation. Muse exceeded ten million downloads within weeks, demonstrating early adoption, while Meta's distribution across nearly four billion existing application users provides a significant advantage. The fund believes Meta can scale its consumer agent to a billion or more users and eventually monetize commercial transactions, while the enterprise platform addresses hundreds of millions of businesses. Although Meta's valuation has expanded from 18 to 22 times forward earnings, Pershing Square continues to see meaningful undervaluation and expects annual earnings growth exceeding 20% over the next several years.
“We continue to view Meta as undervalued given the momentum in its core business”
Key risks
- Meta's extraordinary AI infrastructure expenditure could exceed what its core advertising business can economically support.
- Consumer and enterprise AI agents may fail to achieve sufficient adoption or monetization to justify the incremental compute investment.
- Persistently elevated capital intensity could pressure free cash flow and investment returns if revenue growth fails to accelerate as expected.
- Consensus forecasts anticipate a slowdown in Meta's revenue growth from approximately 27% in 2026 to around 16% by 2029, creating risk if the fund's more optimistic expectations do not materialize.