Investor Panic Over AI: Portfolio Shifts & Bill Ackman's Meta Investment

Current Market Landscape & AI Impact

• 📉 The speaker's portfolio is significantly down, reflecting a broader market trend where "something big is happening" due to AI.
• 💸 Software companies like Intuit, Salesforce, and Adobe, along with financial giants such as S&P Global and Moody's, are experiencing immense stock price destruction due to fears of AI competition.
• 🚀 Companies with no perceived AI threat, like Costco and Texas Roadhouse, are performing well and are near all-time highs.

The Rapid Advancement of AI

• ⚡ AI's improvement rate is staggering, progressing from inability to do basic arithmetic in 2022 to passing the bar exam in 2023 and writing working software by 2024.
• 🤖 By late 2025, engineers were handing over most coding work to AI, and by early 2026, new models made previous versions feel like a different era, leading to predictions of AI models smarter than most humans by 2026-2027.
• 🧠 OpenAI's GPT 5.3 Codex was instrumental in creating itself, demonstrating an "intelligence explosion" where AI helps build the next, smarter generation.

Investor Fears & Company Vulnerabilities

• ⚠️ Investors are concerned that AI can replace many knowledge-based tasks, threatening the business models of companies providing legal work, financial analysis, content creation, software engineering, medical analysis, and customer service.
• 📉 The market is liquidating companies with AI exposure or those with massive capital expenditure (capex) spend on AI infrastructure, fearing lower margins and indefinite spending.
• 📊 Examples of companies being crushed include Atlassian, HubSpot, Duolingo, Intuit, Service Now, and Monday.com, with some down over 70% in the past year.

S&P Global & Moody's Resilience

• 💡 Despite market sell-offs, the speaker believes S&P Global and Moody's are well-situated to grow alongside AI due to their proprietary, non-public data and trusted standardized data for billion-dollar institutions.
• ✅ S&P Global employs a platform-agnostic AI approach, partnering with multiple vendors like Anthropic, Google, OpenAI, and Microsoft, while ensuring LLMs are not permitted to train on their proprietary data.
• 📈 Management expects AI-driven enhancements to strengthen renewal economics and generate incremental net new sales, contrasting with the market's negative pricing, and is executing a billion-dollar share buyback.

Bill Ackman's Meta Investment Thesis

• 🎯 Bill Ackman's Pershing Square Capital made a significant 10% allocation to Meta, viewing it as a high-quality company with an attractive valuation (22x forward PE for 20% EPS growth).
• 🚀 Meta's business is a clear beneficiary of AI integration, with AI-driven content recommendation systems and ad targeting already enhancing engagement and revenue growth.
• 💰 The company's capex spend on AI initiatives and Reality Labs is seen as a long-term investment, with Meta's strong balance sheet and high-margin core business providing significant financial flexibility.

Long-Term Investment Philosophy

• ⚖️ The speaker acknowledges the overwhelming accuracy of the AI narrative but believes the market often overshoots, leading to incorrect sell-offs of fundamentally strong companies.
• 📈 Historically, robust earnings growth eventually overpowers misguided secular concerns and negative narratives, as seen with Google, Amazon, and Uber.
• 🛡️ The speaker is positioning his portfolio towards big tech capex spenders and companies insulated from AI threats, confident that long-term earnings growth will validate these investments.