Billionaire Brad Gerstner Dumped All of His Alphabet Then Bought 2 Stocks Nobody Expected

Brad Gerstner’s Altimeter Capital fully exited its entire 519,290-share Alphabet (NASDAQ:GOOGL | GOOGL Price Prediction) 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, both of whom also reduced or sold the name in Q1. 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 twice. At Q1 2026 earnings it moved to $180 billion to $190 billion, and at Q2 2026 earnings on July 22, Alphabet raised the range again to $195 billion to $205 billion as AI infrastructure demand outpaced supply. The scale of that commitment is visible in the quarterly figures: Q2 alone carried $44.9 billion in capital expenditures, roughly double the year-ago quarter, and free cash flow swung to a deficit of $5.9 billion for the period. That full-year figure more than doubles the company’s 2025 spend and is reshaping its free-cash-flow profile. Alphabet’s Q3 2026 earnings, due October 27, will be the next test of whether that spending trajectory is moderating. Selling near a 27x trailing P/E after a 100% one-year run reads as a combined valuation-and-capex call.

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 record quarterly revenue of $1.49 billion, up 20% year over year, with data center royalty revenue more than doubling in the same period. Full-year fiscal 2026 revenue reached $4.92 billion, up 23%, marking the third consecutive year of better than 20% growth. Momentum carried into fiscal 2027: Q1 (the quarter ended June 30, 2026) brought revenue of $1.29 billion, up 22% year over year, with data center royalties doubling again and both licensing and royalty lines reaching first-quarter records. 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 and a total revenue target of approximately $25 billion by fiscal 2031, unveiled at the Q1 FY2027 investor presentation.

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. Q2 2026 revenue grew 35% year over year to $904 million, marking the company’s tenth consecutive quarter above 30% growth. Annual recurring revenue reached $1.6 billion, up 39%, with net revenue retention at 126%, and management raised full-year guidance to 32% to 34% revenue growth. Future contracted bookings grew 41% year over year to $15.1 billion, underscoring durable demand across public safety agencies. Gerstner entered the position after the stock had declined roughly 41% from its year-ago price, a deliberate contrarian entry into a high-quality compounder under pressure. Axon’s next quarterly report, covering Q3 2026, is scheduled for November 10.

What It Means for Investors

Neither position has been easy to hold since the Q1 filing. Arm surged from Gerstner’s implied entry near $151 per share to a 52-week high of $452.70 before pulling back sharply. By mid-October 2026 the stock had retreated into the $230 to $240 range, well above cost but roughly half the peak. The analyst consensus price target stands at approximately $303, based on 27 analysts surveyed by MarketBeat as of October 13, 2026. The stock carries a trailing P/E well above 150x, reflecting just how much of the investment case rests on the ARM AGI CPU cycle and data center royalty acceleration. Axon carries its own complications: it trades at roughly 60x forward earnings, still has an unremediated revenue recognition material weakness in internal controls (design remediation work has been completed but Axon is awaiting a sufficient operating period before declaring it resolved), and projects $590 to $620 million in 2026 stock-based compensation.

Since the Q1 13F was filed, Altimeter’s Q2 2026 13F (portfolio date June 30, 2026, filed August 14) revealed the firm reduced its Arm stake and fully exited Axon, while the portfolio value grew to $9.83 billion. For investors studying the original disclosure, the more durable takeaway remains 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, accelerating data center royalties, and a long-term revenue roadmap behind it. The Axon thesis rested on a ten-quarter growth streak and a $15.1 billion future contracted backlog, with a market position in public-safety AI that is difficult to replicate. Both positions required tolerance for elevated multiples and significant drawdown risk.

Editor’s note: This update adds Arm’s fiscal Q1 2027 results (revenue of $1.29 billion, up 22% year over year, with data center royalties doubling again) and the company’s $25 billion revenue target by fiscal 2031, refreshes the ARM analyst consensus price target to approximately $303 based on MarketBeat data from October 13, 2026, updates the ARM share price context to the mid-October 2026 range, adds that Alphabet’s Q2 2026 free cash flow turned to a deficit of $5.9 billion and that Q3 earnings are due October 27, 2026, and notes that Axon’s Q3 2026 results are expected November 10, 2026.

Contact [email protected] for any questions or corrections.