Billionaire Bill Ackman Has 30% of His Portfolio in 2 AI Stocks. They Could Soar 50% and 100%, According to Wall Street Analysts

Billionaire Bill Ackman runs Pershing Square Capital Management, a top 20 hedge fund as measured by net gains, according to LCH Investment. In December, he had 27 % of assets under management split between two AI stocks: 11% in Meta Platforms (NASDAQ: META) and 16% in Uber Technologies (NYSE: UBER).

In general, Wall Street thinks the stocks are undervalued, but certain analysts expect substantial upside in the next year:

• Barton Crocket at Rosenblatt Securities recently set Meta with a target of $1,015 per share. That implies 50% upside from the current share price of $675.
• Mark Mahaney at Evercore recently set Uber with a target of $150 per share. That implies 100% upside from its current share price of $75.

Here's what investors should know about these stocks.

Image source: Getty Images.

Meta Platforms: 11% of Bill Ackman's portfolio

Meta Platforms owns the three most popular social media platforms by monthly active users. That affords the company deep insight into consumer preferences, which makes it very good at recommending content and targeting advertising campaigns. Meta is leaning on artificial intelligence to strengthen that virtuous cycle. Ad impressions climbed 12% last year, and the average price per ad increased 9%.

Nevertheless, CEO Mark Zuckerberg says the company has hardly scratched the surface. Meta recently launched Muse Spark, the first multimodal reasoning model developed by its superintelligence division. In general, Muse scores slightly lower than leading models from OpenAI and Anthropic, but performs more or less in line with Alphabet's Gemini.

Muse is now the cognitive engine behind the conversational assistant Meta AI, and select users have been invited to test a private API (application programming interface). Meta will initially monetize the model as a tool to improve engagement and ad targeting, as well as through a dedicated shopping mode. But paid API access will eventually allow developers to build Muse into custom applications.

Wall Street expects Meta's earnings to increase at 21% annually over the next three years. That makes the current valuation of 29 times earnings look relatively cheap. Indeed, those values give the company a PEG ratio of 1.3, a discount to the three-year average of 1.5. With pessimism about the company's AI spending weighing on the stock, now is a good time for patient investors to buy a small position.

Uber Technologies: 16% of Bill Ackman's portfolio

Uber operates the largest ridesharing and restaurant food delivery platform in the world, which makes it an ideal partner for companies that want to commercialize autonomous driving technology. Uber hopes to have 100,000 robotaxis on the streets by 2027 with help from partners, and it intends to be the largest facilitator of autonomous vehicle (AV) trips by 2029.

Uber is working with Nvidia to make that happen. The companies (in conjunction with automaker partners) will build a global fleet of autonomous vehicles. The launch will start with Los Angeles and San Francisco in the first half of 2027, before expanding to 28 cities across North America, Europe, Australia, and Asia by 2028. The vehicles will be powered entirely by Nvidia hardware and software.

Additionally, Uber already works with other AV companies. In North America, its platform links riders with Waymo robotaxis in Phoenix, Austin, and Atlanta, and it links riders with Avride robotaxis in Dallas. In the Middle East, Uber connects riders with WeRide robotaxis in Abu Dhabi, Dubai, and Riyadh, and the partnership will expand to 12 more cities by 2030.

Uber stock is currently down 25% from its high, partly because some investors worry that robotaxis will be a headwind for its business. But I think those fears are overblown. Uber is ideally positioned to help original equipment manufacturers (OEMs) scale autonomous ridesharing services. Indeed, Morgan Stanley analysts estimate Uber will account for 22% of autonomous rides in the U.S. by 2032.

Wall Street expects Uber's earnings to increase at 30% annually over the next three years. That makes the current valuation of 16 times earnings look cheap. Those numbers give the stock a PEG ratio of 0.5, a discount to the two-year average of 0.8. Shares may not double in the next year, but the current price is a great entry point for patient investors.

Trevor Jennewine has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Evercore, Meta Platforms, Nvidia, and Uber Technologies. The Motley Fool has a disclosure policy.