Billionaire hedge fund manager Bill Ackman, founder and CEO of Pershing Square Capital Management, recently shared his perspectives on artificial intelligence in an interview with Fortune magazine, offering commentary on three high-profile companies in the sector: SpaceX, Anthropic, and OpenAI.
When asked about upcoming trillion-dollar IPOs, including SpaceX, and how investors should approach them, Ackman advised that investors should always consider whether the price they pay is justified by the company's future prospects. He cautioned that IPOs often come with significant hype and market frenzy, which requires careful scrutiny. SpaceX, he noted, is a remarkable company targeting extremely large markets, holding a dominant position in low-cost payload delivery to space. He also praised Starlink as a great product, which he uses personally.
Ackman acknowledged that while he admires Elon Musk, his feelings are mixed because he is indirectly a shareholder in SpaceX. He has invested in X and xAI, and is also a small investor in SpaceX, holding a sizable personal investment. He described the challenge of investing in companies at a trillion-dollar market cap, noting that the potential for massive returns is much harder compared to earlier stages, like when Amazon went public at a much lower valuation. Ackman stated that SpaceX is slightly behind in artificial intelligence, but when it comes to building infrastructure, no one can do it cheaper or faster than Elon Musk.
Regarding Anthropic, Ackman highlighted its most striking feature: he has never seen a company grow so rapidly. He mentioned that the company is reportedly EBITDA profitable, which would be a very positive signal given its high-speed expansion.
On OpenAI, Ackman said he has no inside information, but based on public reports, its business model incurs massive losses and consumes enormous amounts of cash, potentially hundreds of billions of dollars in the coming years. He expressed curiosity about how long the market will continue to fund such a cash-burning model. He emphasized that the biggest risk in both private and public markets is investing in companies that require ever-increasing amounts of capital. He prefers companies that, while initially capital-intensive, can define a turning point to achieve significant positive cash flow, using Uber as an example of a company that eventually turned around. Ackman concluded that while you can invest in a loss-making company, the risk lies in the market's sudden realization that it is no longer willing to tolerate such losses, especially when the numbers become very large, which is his concern with OpenAI.