Key Takeaways
- Pershing Square’s Bill Ackman revealed a substantial new stake in Microsoft (MSFT) through Friday’s 13F regulatory filing
- The billionaire investor initiated the position in February around 21x forward earnings, matching the overall market valuation
- Ackman liquidated his entire Alphabet (GOOGL) stake to finance the Microsoft purchase, clarifying it wasn’t a bearish view on Google
- Microsoft shares jumped 3% Friday but remain down 17% for the year while the S&P 500 has gained 10%
- The activist investor argues Microsoft’s ~$200B OpenAI ownership (representing 7% of market cap) remains undervalued by the market
Billionaire investor Bill Ackman’s Pershing Square has established a significant stake in Microsoft (MSFT), according to a 13F regulatory filing released Friday. Shares of Microsoft rallied 3% following the disclosure, finishing the session at $421.92.
According to Ackman, Pershing Square started accumulating shares in February following a substantial selloff triggered by Microsoft’s fiscal Q2 2026 earnings release. The hedge fund manager indicated his firm acquired shares at approximately 21 times forward earnings — a valuation comparable to the S&P 500 and significantly lower than Microsoft’s historical trading range.
Microsoft has experienced a challenging year. Shares have tumbled 17% in 2026 even as the S&P 500 has climbed 10%.
The weakness followed a disappointing Q3 earnings announcement that sparked concerns about Azure’s growth momentum. Microsoft also disclosed plans for $190 billion in capital spending for calendar 2026 — a 61% year-over-year increase and approximately $35 billion above analyst projections.
While Ackman recognizes these challenges, he maintains that the market is overlooking a critical component of Microsoft’s value proposition.
Market Undervalues OpenAI Investment
The hedge fund manager highlighted Microsoft’s 27% ownership in OpenAI, which he estimates at roughly $200 billion, representing about 7% of Microsoft’s total market capitalization. According to Ackman, this substantial asset isn’t reflected in the current stock valuation.
Ackman also dismissed concerns that Microsoft 365 faces existential threats from AI competitors. He contends that M365’s deep integration across enterprise systems — spanning identity management, security infrastructure, regulatory compliance, and data governance — creates formidable switching costs that protect it from disruption by standalone AI applications.
“Unlike point software solutions, which may be vulnerable to disintermediation by better-performing AI alternatives, M365 is tightly integrated into the daily workflow of nearly every large enterprise,” Ackman wrote on X.
To provide capital for the Microsoft investment, Ackman divested Pershing Square’s complete Alphabet holdings. He emphasized on Saturday that this decision wasn’t driven by pessimism about Google’s prospects.
No Change in Alphabet Outlook
“Our sale of Google was not a bet against the company. We are very bullish long term on Alphabet. But at current valuations and in light of our finite capital base, we used it as a source of funds for Microsoft,” Ackman wrote.
Wedbush analyst Dan Ives backed the move. He said the Street is still underestimating Azure’s growth trajectory and called Microsoft one of his “favorite large cap tech names to own over the coming years.”
From a technical perspective, Evercore ISI’s Rich Ross highlighted that Microsoft displays one of the “best acting charts” among technology stocks, noting the shares have recaptured their 50-day moving average with “authority” and retreated to a long-term support zone that has remained intact since the European financial crisis.
Ackman has demonstrated a track record with large-capitalization technology investments, having maintained Alphabet as a core portfolio holding before rotating into Microsoft.
