Altimeter's AI Pivot: Ditching Google for Chip Design & Safety Tech

In the first quarter of 2026, Brad Gerstner's Altimeter Capital divested its entire Alphabet holdings. The firm reallocated these funds into two new positions: Arm Holdings and Axon Enterprise. This strategic shift aligns with a growing focus on AI infrastructure, as evidenced by Altimeter's increased investment in CoreWeave.

Alphabet's capital expenditure guidance for 2026 was significantly raised to a range of $195 billion to $205 billion, more than doubling its 2025 spending. This increase is driven by outpaced demand for AI infrastructure. Altimeter's exit from Alphabet, which had seen substantial stock appreciation, is seen as a valuation and capital expenditure call.

The investment in Arm Holdings is a direct play on the AI buildout, with the company reporting record revenue and significant customer demand for its AGI CPUs. Meta is a lead partner, with Google, NVIDIA, Microsoft, and OpenAI also building on Arm's platform.

Axon Enterprise represents a more contrarian bet, extending the AI thesis into public safety infrastructure. The company reported strong revenue growth and a substantial future contracted backlog, indicating durable demand for its connected public safety solutions.

By mid-September 2026, both ARM and Axon experienced volatility. Altimeter adjusted its positions, reducing its ARM stake and fully exiting Axon by the second quarter of 2026. The underlying thesis for these trades involved investing in AI infrastructure providers and vertical AI operators, accepting elevated multiples and drawdown risk.