Warren Buffett assumed leadership of Berkshire Hathaway in 1965, quickly transforming the struggling textile business into an insurance-focused holding company. This strategic shift generated a reliable flow of investable funds from insurance premiums, which Buffett expertly used to grow Berkshire into a trillion-dollar enterprise via smart acquisitions and stock investments.
Billionaire Bill Ackman aims to follow a similar path with Howard Hughes. Through his hedge fund, Pershing Square, he already controls about 47% of the company and intends to turn it into an investment platform resembling a "modern Berkshire Hathaway." While this is a bold goal, Ackman has proven his investing skill—Pershing Square has outperformed the S&P 500 over the past five years.
At present, 30% of Ackman's hedge fund is allocated to two outstanding artificial intelligence (AI) companies. Amazon ( AMZN -1.46%) represents the fund's fourth-largest stake, making up 9% of the portfolio, while Uber Technologies ( UBER -1.08%) is the top holding at 21%. Here are important points for investors to consider.
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Amazon: 9% of Bill Ackman's portfolio
Amazon maintains significant influence across three key sectors. It operates the largest online retail marketplace in both North America and Western Europe, ranks as the third-biggest player in ad technology, and is the leading retail advertiser internationally. Additionally, Amazon Web Services (AWS) holds the top spot among cloud computing platforms based on infrastructure and platform services expenditures.
Artificial intelligence (AI) is integrated throughout Amazon’s retail operations, optimizing inventory management, product displays, customer support, delivery logistics, and developer efficiency. The company also employs AI to help robots maneuver warehouses and to enable seamless interaction between people and robots using natural language. These efforts are expected to further enhance the profitability of Amazon’s retail division.
In the second quarter, AWS captured 30% of the cloud infrastructure and platform services market, surpassing its nearest rival, Microsoft, by 10 percentage points. As the leading provider of public cloud services, AWS stands to benefit as AI adoption accelerates, especially given its role as the primary cloud partner for Anthropic, an AI company recognized for its conversational assistant Claude.
Amazon’s second-quarter results surpassed analyst forecasts for both revenue and profit. Sales climbed 13% to $167 billion, driven by robust performance in advertising and cloud computing. Operating margin improved by 1.5 percentage points thanks to ongoing cost-reduction strategies, while GAAP net income surged 33% to $1.68 per diluted share.
Bill Ackman began accumulating Amazon shares during the second quarter. According to Pershing Square’s Chief Investment Officer Ryan Israel, “We believed that the company could navigate any slowdown in its cloud segment, Amazon Web Services (AWS), and we did not consider tariffs a significant threat to the retail division’s profitability.”
Analysts on Wall Street project Amazon’s earnings to grow by 17% annually over the next three years, which means its current price-to-earnings ratio of 35 is neither particularly cheap nor pricey. For those interested in Amazon, the most cautious approach would be to initiate a small position now and gradually add more shares during future market declines.
Uber Technologies: 21% of Bill Ackman's portfolio
Uber stands out as a frontrunner in both ride-hailing and food delivery. It operates the largest ride-sharing service and the second-biggest restaurant delivery platform in the U.S. based on revenue. Beyond the U.S., Uber leads in ride-sharing across nine countries and dominates food delivery in eight. This global scale gives Uber several key advantages:
- With both ride and delivery services available through one app, Uber can promote its offerings across platforms: 31% of Delivery First trips originate from mobility users, while 22% of Mobility First trips come from delivery users.
- Uber experiences a robust network effect—the platform becomes increasingly beneficial to customers as more drivers join, and more attractive to drivers as its customer base expands.
- Uber’s vast data resources guide its decisions, continually improving driver dispatch, route planning, and pricing. This data also allows advertisers to target users within the app.
Uber delivered strong second-quarter earnings, with monthly active users rising 15% and total trips increasing 18%, indicating higher user engagement. Revenue was up 18% to $12.7 billion, fueled by gains in both mobility and delivery, though tempered by a slight decline in freight. GAAP net income jumped 34% to $0.63 per diluted share.
Uber is in a unique position to support autonomous vehicle (AV) companies in launching robotaxi services, thanks to its status as the world’s largest ride-hailing platform. CEO Dara Khosrowshahi believes this technology could unlock a trillion-dollar market in the U.S. alone, and Uber is actively pursuing this opportunity.
The company now works with 20 AV partners, and its platform currently connects riders to robotaxis in four locations: Phoenix, Austin, and Atlanta via Alphabet’s Waymo, and Abu Dhabi through WeRide. Uber expects five more rollouts in Asia, the Middle East, and the U.S. before the end of 2025, with additional launches set for 2026.
Wall Street analysts forecast that Uber’s earnings will expand at an average rate of 22% per year over the coming three years. This gives the current price-to-earnings ratio of 16 an appealing value. While Uber isn’t a classic AI stock, its strong position in autonomous driving makes it an attractive option. Investors who are willing to hold for at least three years may want to consider starting with a modest investment now.
