Key Takeaways
- • Bill Ackman's Pershing Square hedge fund completely exited its Alphabet position in Q2 2026, capitalizing on a stock that has gained 100% over the prior 18 months.
- • Ackman initiated a new position in Netflix, a mega-cap stock trading 42% below its record high, signaling conviction in a deeply discounted valuation opportunity.
- • Alphabet delivered Q2 revenue growth of 24% to $120 billion with 12 consecutive quarters of double-digit growth, though the company missed bottom-line estimates.
- • Google Cloud revenue accelerated 82% year-over-year in Q2, marking the fifth consecutive quarter of acceleration, driven by strong AI infrastructure demand.
- • The portfolio repositioning reflects a strategic shift from a high-momentum AI play (Alphabet) to a beaten-down media and entertainment mega-cap (Netflix), potentially signaling risk-taking or valuation concerns around Alphabet's premium valuation.
Summary
Bill Ackman's Pershing Square Capital Management, ranked among the 20 most successful hedge funds globally by LCH Investments on a net gains basis since inception, made significant portfolio adjustments in the second quarter of 2026. The fund completely divested its stake in Alphabet (NASDAQ: GOOGL, GOOG) while simultaneously establishing a new position in Netflix (NASDAQ: NFLX), marking a notable rotation in the portfolio's growth and technology exposure.
The exit from Alphabet came despite the stock's strong 100% appreciation over the prior 18 months, reflecting what appears to be profit-taking or a reassessment of valuation risk. Alphabet itself delivered solid operational results in Q2, with revenue increasing 24% to $120 billion—extending its streak of double-digit revenue growth to 12 consecutive quarters. However, the company missed bottom-line estimates, suggesting margin pressures despite top-line strength. Operating income on a GAAP basis rose 31% to $41 billion, demonstrating operational leverage. The company's core digital advertising business, which accounts for more than two-thirds of total revenue, continues to generate substantial cash flow, while Google Cloud emerged as an increasingly material contributor to earnings, expanding 82% year-over-year in Q2—its fifth consecutive quarter of acceleration, propelled by elevated demand for AI infrastructure services.
The corresponding investment in Netflix represents a contrarian positioning against a stock down 42% from its all-time high, placing Ackman on the same side as other prominent value-oriented investors who have identified potential opportunity in the beaten-down media and streaming name. This trade suggests conviction in mean reversion, competitive positioning within the streaming landscape, or valuation attractiveness relative to longer-term growth prospects. The rotation from Alphabet to Netflix demonstrates a tactical shift from riding momentum in an established mega-cap AI beneficiary to establishing exposure at substantial discount to peak valuations.
The exit from Alphabet came despite the stock's strong 100% appreciation over the prior 18 months, reflecting what appears to be profit-taking or a reassessment of valuation risk. Alphabet itself delivered solid operational results in Q2, with revenue increasing 24% to $120 billion—extending its streak of double-digit revenue growth to 12 consecutive quarters. However, the company missed bottom-line estimates, suggesting margin pressures despite top-line strength. Operating income on a GAAP basis rose 31% to $41 billion, demonstrating operational leverage. The company's core digital advertising business, which accounts for more than two-thirds of total revenue, continues to generate substantial cash flow, while Google Cloud emerged as an increasingly material contributor to earnings, expanding 82% year-over-year in Q2—its fifth consecutive quarter of acceleration, propelled by elevated demand for AI infrastructure services.
The corresponding investment in Netflix represents a contrarian positioning against a stock down 42% from its all-time high, placing Ackman on the same side as other prominent value-oriented investors who have identified potential opportunity in the beaten-down media and streaming name. This trade suggests conviction in mean reversion, competitive positioning within the streaming landscape, or valuation attractiveness relative to longer-term growth prospects. The rotation from Alphabet to Netflix demonstrates a tactical shift from riding momentum in an established mega-cap AI beneficiary to establishing exposure at substantial discount to peak valuations.
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