Bill Ackman Replaces Alphabet With 2 Undervalued AI Stocks

When billionaire investor Bill Ackman makes a meaningful portfolio shift, markets pay attention. Ackman, the founder of Pershing Square Capital Management, is known for running a concentrated portfolio and placing high-conviction bets. So the decision to reduce exposure to Alphabet and rotate into two other AI-related names has sparked a new wave of interest among investors looking for undervalued artificial intelligence stocks with long runways.

While Alphabet remains a world-class business with deep AI capabilities, the broader takeaway from Ackman’s move is simple: the AI opportunity is expanding beyond the usual suspects. In many cases, the most interesting upside can come from companies that enable AI adoption at scale, rather than the obvious household-name platforms.

Why Would Ackman Replace Alphabet in the First Place?

Alphabet has been an AI research leader for years, and its products (Search, YouTube, Google Cloud) provide enormous distribution. But even a great company can become less attractive if its valuation rises, growth slows, or risks become more pronounced. Investors also consider opportunity cost: holding Alphabet means not holding something else that could offer higher risk-adjusted returns.

Some common reasons a hedge-fund manager might trim or replace Alphabet include:

• Valuation compression risk: mega-caps can deliver strong returns, but upside may be more limited if the market has already priced in years of AI-driven growth.
• Regulatory overhang: large platforms face ongoing antitrust scrutiny, privacy regulation, and policy uncertainty across multiple regions.
• AI monetization timing: embedding AI into search and consumer products may enhance user value but can also pressure margins and advertising economics in the near term.
• Better picks-and-shovels opportunities: the companies powering AI infrastructure and workflows can sometimes offer clearer revenue linkage to AI adoption.

That context helps explain why Ackman could look beyond Alphabet and into AI-adjacent names where expectations are lower and upside is underappreciated.

The AI Investing Setup: Where Undervalued Can Still Exist

The AI rally has lifted many stocks, but not every AI beneficiary trades at a premium. Undervalued in AI often doesn’t mean cheap in the traditional low P/E sense. Instead, it can mean:

• Misunderstood AI leverage: the market may underappreciate how a company benefits from AI rollout and infrastructure spend.
• Temporary headwinds: cyclical weakness, margin pressure, or integration costs can mask long-term upside.
• Under-monetized assets: a company may own strategic platforms, data, or customer relationships that become more valuable in an AI-first world.

Two stocks that fit this undervalued AI beneficiary profile and have been widely discussed as alternatives to mega-cap AI exposure are Uber and Chipotle—both of which align with Ackman-style investing: strong brands, scalable platforms, and improving unit economics, with AI acting as a force multiplier.

Undervalued AI Stock #1: Uber Technologies (UBER)

Why Uber Is an AI Company (Even If It Doesn’t Look Like One)

Uber isn’t building foundation models like a Big Tech lab, but it is one of the most data-rich, real-time logistics platforms on the planet. Its marketplace depends on sophisticated algorithms to match riders and drivers, forecast demand, optimize routes, price trips, reduce fraud, and improve delivery efficiency.

As AI tools improve, Uber’s ability to:

• Increase marketplace efficiency (better matching, less idle time)
• Lower operational costs (support automation, fraud detection)
• Improve personalization (higher conversion, better retention)
• Expand into new services (ads, subscriptions, business travel)

…can turn incremental innovation into measurable margin expansion.

Where Uber’s Undervaluation Argument Comes From

Uber spent years being treated like a cash-burning growth story. But as profitability has improved and free cash flow has become more consistent, the narrative has shifted. The market still debates how durable those margins are and how competitive mobility and delivery will remain. That skepticism can create a valuation gap relative to the company’s cash generation potential.

In an AI-driven world, Uber can also benefit from enterprise adoption of automation and optimization. Even modest improvements to efficiency can have outsized bottom-line impact because Uber operates at massive scale.

Key Catalysts to Watch

• Margin expansion: continued improvements in take rate, utilization, and cost discipline.
• Advertising: Uber’s ads business can scale as targeting and personalization improve.
• Platform bundling: subscriptions and cross-selling between rides and delivery.
• Autonomy optionality: partnerships in autonomous driving could reshape long-term economics (though timing is uncertain).

Undervalued AI Stock #2: Chipotle Mexican Grill (CMG)

How a Restaurant Company Becomes an AI Winner

At first glance, Chipotle doesn’t belong in an AI stock conversation. But modern AI is increasingly about workflow automation, labor productivity, demand forecasting, and customer personalization—all areas that can materially impact restaurant margins.

Chipotle has been leaning into technology across operations and digital ordering for years. AI-driven tools can help the company:

• Forecast demand more accurately (reducing waste and stockouts)
• Optimize labor scheduling (improving throughput and labor efficiency)
• Improve order accuracy (fewer refunds, better customer satisfaction)
• Personalize offers (boosting repeat purchases and digital conversion)

In other words, AI can strengthen what Chipotle already does well: high throughput, operational consistency, and strong unit economics.

Why Chipotle Can Be Undervalued Despite a Strong Brand

Chipotle often trades at a premium because of its brand strength and growth profile. So how can it be considered undervalued? In this context, undervalued can mean the market is still not fully pricing in how technology and AI can push restaurant operating models into a new level of efficiency.

If AI-driven execution improves throughput during peak hours, strengthens digital mix economics, and reduces controllable costs, Chipotle’s long-term earnings power could be higher than many traditional models assume.

Key Catalysts to Watch

• Digital growth: higher-margin digital engagement supported by personalization.
• New store expansion: scaling locations while maintaining returns on invested capital.
• Operational improvements: throughput gains tied to better forecasting and labor tools.
• Resilience: the ability to protect traffic and margins in a tougher consumer environment.

What This Rotation Says About the Next Phase of AI Investing

Ackman’s move away from Alphabet and toward AI beneficiaries like Uber and Chipotle highlights a shift many investors are making: from betting solely on the companies building AI, to investing in companies that profitably deploy AI to widen competitive moats.

That matters because:

• AI adoption is spreading: the biggest gains may come from applying AI across logistics, retail, restaurants, healthcare, and financial services.
• Real-world data advantages are powerful: Uber’s marketplace data and Chipotle’s operational workflows provide compounding advantages.
• Execution beats hype: companies improving margins and customer experience with AI can outperform even if they aren’t labeled AI-first.

Risks to Consider Before Following Ackman

No matter how compelling the thesis, investors should weigh what could go wrong.

Uber Risks

• Competitive intensity: pricing pressure in mobility and delivery can limit margin expansion.
• Regulation: worker classification and local rules can impact costs.
• Macroeconomic sensitivity: demand can weaken during downturns.

Chipotle Risks

• Food inflation: commodity swings can pressure margins.
• Labor market volatility: hiring and wage costs remain a key variable.
• Execution risk: growth depends on operational consistency at scale.

Bottom Line: Two AI Plays That Don’t Look Like Typical AI Stocks

Replacing Alphabet with Uber and Chipotle is a reminder that the AI opportunity is broader than Big Tech. Investors looking for undervalued AI stocks may find compelling setups in companies using AI to improve operational efficiency, strengthen customer experience, and expand margins—especially when the market is still catching up to how meaningful those gains can be.

Uber offers AI leverage through logistics, real-time marketplace optimization, and monetization layers like advertising. Chipotle offers AI leverage through forecasting, labor optimization, digital personalization, and more efficient unit economics. For investors, the key is to focus less on AI buzzwords and more on measurable advantages: cash flow, scalability, and durable competitive moats.

Note: This article is for informational purposes only and does not constitute investment advice.

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