Billionaire Brad Gerstner Dumped All of His Alphabet Then Bought 2 Stocks Nobody Expected
Billionaire Brad Gerstner Dumped All of His Alphabet Then Bought 2 Stocks Nobody Expected
Joel South Sat, July 25, 2026 at 10:01 AM UTC
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Gerstner exited GOOGL entirely and deployed $260 million into ARM, choosing an AI infrastructure picks-and-shovels play over a capex-heavy mega-cap.
AXON posted 34% revenue growth and raised full-year guidance yet sits 41% below its year-ago price, making it Gerstner's contrarian entry.
ARM trades at 156x forward earnings and has already surged 103% since March 31, making the rotation thesis more actionable than copying the trade.
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Brad Gerstner's Altimeter Capital fully exited its entire 519,290-share Alphabet (NASDAQ:GOOGL) position in Q1 2026, according to the firm's 13F filed May 15, 2026 (SEC CIK 0001541617). In its place, Gerstner opened two brand-new positions that did not exist in the prior quarter: 1,715,440 shares of Arm Holdings (NASDAQ:ARM) worth roughly $259.5 million, and 148,986 shares of Axon Enterprise (NASDAQ:AXON) worth about $63.3 million. The filing also showed that Altimeter, whose 13F portfolio stood at $5.7 billion as of March 31, added substantially to CoreWeave in the same quarter, deepening a concentrated bet on AI infrastructure.
What He Bought and Why It Matters
The Alphabet exit draws attention partly because it places Gerstner alongside Stanley Druckenmiller and Bill Ackman, who also reduced or sold the name in Q1. But the replacement trades carry the real signal. Alphabet posted 82% year-over-year quarterly earnings growth and 38% profit margins, yet its 2026 capital expenditure guidance has since been raised to $180 billion to $190 billion, a figure that more than doubles its 2025 spend and is reshaping the company's free-cash-flow profile. Selling near a 27x trailing P/E after a 100% one-year run reads as a combined valuation-and-capex call.
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The Underlying Thesis
ARM is a pure-play on the compute architecture inside the AI buildout that Alphabet itself is funding. In fiscal Q4 2026, Arm delivered revenue of $1.49 billion, up 20% year over year, with data center royalty revenue more than doubling in the same period. CEO Rene Haas cited "more than $2 billion in customer demand" for the new Arm AGI CPU across fiscal 2027 and 2028, with Meta as lead partner and Google, NVIDIA, Microsoft, and OpenAI all building on the platform. Management is targeting a $100-plus billion data center CPU opportunity by 2030.
Axon is the more contrarian of the two bets. It extends the AI thesis out of enterprise software and into physical public-safety infrastructure, connecting Tasers, body cameras, drones, and the cloud software that ties them together. Q1 2026 revenue grew 34% year over year to $807 million, marking the company's ninth consecutive quarter above 30% growth. Annual recurring revenue reached $1.5 billion, up 35% with net revenue retention at 125%, and management raised full-year guidance to 30% to 32% revenue growth. Gerstner entered the position after the stock had declined roughly 41% from its year-ago price, making this a deliberate contrarian entry into a high-quality compounder under pressure.
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What It Means for Investors
Neither position has been easy to hold since the filing. ARM surged from Gerstner's implied entry near $151 per share to a mid-June peak of $412.55 before pulling back sharply, leaving the position up roughly 80% from cost as of mid-July. The stock trades well above the current analyst consensus target of around $300, at a forward earnings multiple above 150x. Axon carries its own complications: it trades at roughly 60x forward earnings, carries a material weakness in internal controls, and projects $590 to $620 million in 2026 stock-based compensation.
For investors studying the disclosure, the more durable takeaway is the framework behind the trades. Gerstner rotated from a mega-cap funding the AI buildout into the picks-and-shovels architecture provider and a vertical AI operator with a near-monopoly in its niche. The ARM thesis has verifiable customer commitments and accelerating data center royalties behind it. The Axon thesis rests on a nine-quarter growth streak, a $14.3 billion future contracted backlog, and a market position in public-safety AI that is difficult to replicate. Both positions require tolerance for elevated multiples and significant drawdown risk.
Editor's note: This update corrects Alphabet's 2026 capital expenditure guidance to the revised range of $180 billion to $190 billion (raised from the initial $175 billion to $185 billion during Q1 2026 earnings), refreshes ARM's analyst consensus price target to approximately $300 from the stale $254.87 figure, updates ARM's gain from Gerstner's entry to reflect the stock's pullback from its mid-June peak of $412.55, and adds context on Altimeter's concurrent CoreWeave position and Axon's Q1 2026 net revenue retention of 125%.
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Source: “AOL Money”
