Pershing Square Cites 26% Ad Growth in Defense of Meta's AI Capital Spending

Pershing Square pointed to accelerating revenue expansion in Meta Platforms' advertising division as evidence that the company's substantial capital outlays for artificial intelligence are showing measurable commercial returns, according to an analysis reported by Yahoo Finance (https://finance.yahoo.com/technology/ai/articles/meta-platforms-inc-meta-spending-194313087.html?.tsrc=rss).

In its third-quarter 2026 investor letter, the investment firm highlighted Meta alongside other tech infrastructure builders, addressing a primary question for public-market tech investors: whether billions invested in specialized compute clusters can produce meaningful returns beyond incremental optimizations to legacy digital ad networks.

Pershing Square reported that Meta's core advertising revenue expanded by 26% year over year during the third quarter. The firm attributed the acceleration to machine learning enhancements in algorithmic content recommendations and automated ad targeting, stating that these updates lifted both user engagement and monetization efficiency across Facebook, Instagram, WhatsApp, and Messenger. Meta's share price rose 29% in the third quarter and was up 10% year-to-date through that period.

Beyond consumer advertising, Pershing Square highlighted the third-quarter rollouts of the Muse personal agent and the Meta Enterprise Platform. According to the investor letter, those releases offer a concrete blueprint for how the company plans to commercialize its computing capacity outside its core ad-supported apps.

The firm observed that Meta's valuation multiple widened from 18 times forward earnings at the close of the second quarter to 22 times forward earnings. Despite that expansion, Pershing Square maintained that the shares remain undervalued relative to earnings power, projecting that Meta will compound earnings at an annual rate exceeding 20% over the next several years.

Broader hedge fund positioning showed minor trimming earlier in the year. Data compiled in the Yahoo Finance report noted that 254 hedge funds held positions in Meta at the end of the second quarter of 2026, down from 262 funds at the end of the first quarter. Meta shares closed at $606.73 on Nov. 2, 2026, valuing the company at approximately $1.55 trillion within a 52-week range of $520.26 to $779.82.

The durability of that valuation will depend on whether commercial adoption of the Meta Enterprise Platform and Muse agents can convert experimental AI capacity into recurring, non-advertising cash flows.