Bill Ackman's Pershing Square dumped its Alphabet position and initiated a stake in Netflix during the second quarter, according to regulatory filings, swapping an artificial-intelligence winner that had doubled in 18 months for a streaming giant trading 42 percent below its all-time high.
The Alphabet exit
Alphabet posted its twelfth straight quarter of double-digit revenue growth in the second quarter, with sales climbing 24 percent to $120 billion and GAAP operating income rising 31 percent to $41 billion. Google Cloud revenue accelerated for a fifth consecutive period, surging 82 percent as demand for AI infrastructure drove the first external sales of the company's tensor processing units. Gemini APIs now process 22 billion tokens per minute, up from 16 billion three months earlier, and 90 percent of Fortune 100 companies use the enterprise platform. Google added two percentage points of cloud market share over the past year, outpacing Amazon's 37 percent and Microsoft's 43 percent cloud growth in their latest quarters.
The cash-flow inflection
Despite the top-line strength, Alphabet recorded its first quarter of negative free cash flow as a public company and lifted its 2026 capital-expenditure target to $200 billion from $91 billion in 2025. The spending trajectory coincided with a sharp share-price drop after the earnings release; the stock remained 2 percent below its pre-report level as of September 4.
The Netflix bet
Netflix retains the lead across every core streaming metric, monthly active users, revenue, retention and share of TV viewing time, giving it a data edge that consistently produces the most-watched original series and films. Ackman's purchase came while the shares sat 42 percent off their record peak.
What to watch
The Alphabet trade hinges on whether AI infrastructure spending eventually converts to durable free-cash-flow growth or merely fuels a capex arms race. The Netflix position bets that the incumbent's scale and data moat will reassert itself once the streaming wars settle into a steadier competitive rhythm.