Pershing Square Capital Management, led by Bill Ackman, disclosed in its latest interim report that it sold its entire position in Alphabet (GOOG) during the second quarter and initiated a new position in Netflix (NFLX), buying more than 13 million shares worth over $934 million. The Netflix stake accounts for nearly 5% of the portfolio.
According to Ackman and Chief Investment Officer Ryan Israel, Netflix’s forward earnings multiple has compressed from 40 times to 21 times after the stock fell about 50% from its June 2025 all-time high, creating what they see as an attractive risk-reward opportunity.
The Alphabet sale was not driven by a negative view of the company. Pershing Square had already trimmed most of its Alphabet stake in the first quarter and sold the remainder in the second. Ackman said on X that he remains very bullish on Alphabet long term, but with a finite capital base and current valuations, the fund used Alphabet as a source of funds for Microsoft.
Pershing Square first bought Alphabet in the first quarter of 2023, when artificial intelligence was still in its early stages. Alphabet responded quickly to the AI shift by rolling out AI overviews across Google search results and launching its Gemini family of large language models. The company also faced a U.S. Department of Justice antitrust case over digital advertising. A federal judge ruled that Alphabet had acted as a monopoly but did not impose the harshest remedies sought by the DOJ, such as forcing a Chrome divestiture, and allowed Alphabet to continue paying Apple to keep Google as the default search engine in Safari. The judge noted that emerging AI competition had reduced Google’s monopoly power. Ackman’s team exited on valuation and capital allocation considerations.
Netflix has been under pressure as investors worry about declining engagement and the rise of short-form video and AI-generated content. Ackman and Israel believe those concerns are exaggerated. They pointed out that short-form video consumption has increased sharply over the past two years but has had no discernible impact on Netflix’s results, and is more likely to affect linear television or lower-quality streaming services. On AI, they argued that the market underestimates the cost of generating high-quality long-form video, which remains among the most compute-intensive AI tasks. If compute costs remain elevated, Netflix’s ability to spread content costs across the industry’s largest user base is a highly valuable competitive advantage. AI should also enhance content recommendations and ad targeting.
Netflix had previously sought to acquire most of Warner Bros. Discovery’s assets but walked away from a bidding war and received a $2.8 billion termination fee. The stock has since declined again as engagement and AI competition worries resurfaced. Ackman’s move reflects the concentrated, contrarian approach that has defined Pershing Square since 2004: the fund has delivered a cumulative return of 2,530% and a compound annual return of 15.6%, compared with roughly 964% and 11% for the S&P 500.
