Legendary investor Bill Ackman has spent decades hunting for quality businesses and potential winners. The rise of artificial intelligence and its applications has changed the way he examines companies, because the disruptive impact of emerging technology has become a real risk.
The CEO of Pershing Square Capital Management has invested in the "Magnificent Seven" stocks, with Microsoft, Meta and Amazon occupying significant positions. Ackman's recent comments about artificial intelligence and the increased risks it brings may help explain why.
Speaking on "The Knowledge Podcast," Ackman said that when evaluating an investment target, he considers whether he would still be willing to hold shares in the company even if the stock market were shut for 10 years. Ackman noted that focusing on the revenue a company generates and anticipating what the business will look like in 10 or 20 years is crucial.
This is exactly where artificial intelligence may come into play. "Artificial intelligence has greatly increased the risk of industries suffering disruptive shocks," Ackman said. Ackman pointed out that investors must examine the businesses they invest in and think about how artificial intelligence might disrupt them.
The investor said that when assessing a company's "moat" and how wide it is, he now has to be especially cautious, because some businesses may die due to the impact of artificial intelligence.
The positive side of artificial intelligence
Ackman acknowledged in the interview that Pershing Square uses artificial intelligence for investment research. He also highlighted medical advances that artificial intelligence helps make possible. The investor said artificial intelligence brings opportunities and makes it more likely that businesses which were previously impossible can be created.
"Its pace of progress is faster than anything I have seen before." Ackman said artificial intelligence will enable people who were not previously entrepreneurs to become entrepreneurs.
When discussing investment positioning, Ackman specifically mentioned Meta's recently launched Muse AI agent, although he himself has not yet tried it in person. He mentioned that colleagues in the Pershing Square office have already used Muse and have been full of praise for how easy it is to create agents.
Another investment that Pershing Square is focusing on is Brookfield, which is involved in physical infrastructure. "Brookfield is undoubtedly a winner in the artificial intelligence field," Ackman said.