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.

What He Bought and Why It Matters

The Alphabet exit is the headline only because it puts Gerstner alongside Stanley Druckenmiller and Bill Ackman, who also reduced or sold the name in the same quarter. The replacement trades carry the real signal. Alphabet has posted 82% YoY quarterly earnings growth and 38% profit margins, yet 2026 capital expenditure guidance of $175 billion to $185 billion is reshaping the free-cash-flow profile. Selling at a 27 trailing P/E after a 100% one-year run is a valuation-and-capex call.

The Underlying Thesis

ARM is a pure-play on the architecture inside the AI buildout that Alphabet is funding. In fiscal Q4 2026, ARM delivered revenue of $1.49 billion, up 20% YoY, with data center royalty revenue more than doubling YoY. CEO Rene Haas flagged “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. The addressable market: a $100+ billion data center CPU opportunity by 2030.

Axon is the more provocative bet. It extends the AI thesis out of enterprise software and into physical public-safety infrastructure: Tasers, body cameras, drones, and the cloud software that ties them together. Q1 2026 revenue grew 34% YoY to $807.35 million, ARR reached $1.49 billion (+35%), and management raised full-year guidance to 30% to 32% revenue growth. Gerstner is buying after the stock fell 21% year-to-date and 41% over the past year. This is a contrarian entry.

What It Means for Retail Investors

The trades have not been easy to ride. ARM is up more than 153% since March 31, and trades at 156x forward earnings, well above the analyst consensus target of $254.87 against a current price around $383. Axon trades at 60x forward earnings with a material weakness in internal controls and $590 to $620 million in projected 2026 stock-based compensation.

For a retirement-focused investor, the takeaway is the framework rather than the trade. Gerstner is rotating from a richly valued 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. Following the trade outright means accepting triple-digit P/E ratios and 25% weekly drawdowns. Studying the thesis, capex versus enabler, scaled incumbent versus emerging vertical, is the more durable use of the disclosure. The ARM thesis is the one with verifiable customer commitments behind it. Axon remains the early call worth watching.