Bill Ackman sold his long-time Alphabet stake to build a new position in Microsoft, betting the software giant's beaten-down stock is an AI bargain.
Pershing Square started buying Microsoft shares in February after a post-earnings slump tied to slower cloud growth and surging spending, Ackman said on X. The firm plans to disclose the stake in a Friday SEC filing. Ackman's new closed-end fund, Pershing Square USA, also made Microsoft a core holding.
Microsoft shares have dropped roughly 15% this year as investors worry about slow Copilot adoption, Azure losing ground to Google Cloud, and a renegotiated OpenAI partnership that strips Microsoft of exclusive rights to resell the startup's models on its cloud. The stock was trading around $409 ahead of Friday's open.
Ackman called those concerns overblown and the valuation "highly compelling."
"We view Microsoft's recent decision to restructure its OpenAI partnership not as a concession but as part of a deliberate pivot toward a more open, multi-model architecture that better serves enterprise customers," Ackman said.
He pointed to Microsoft's two most valuable enterprise businesses, Azure cloud and the M365 Office suite with its $30-a-month Copilot AI assistant, as core to rising AI adoption. He also backed Microsoft's $190 billion capital spending plan for 2026, calling it essential for future revenue growth. To fund the Microsoft bet, Ackman fully liquidated Pershing Square's Alphabet position in the second quarter. The firm bought Alphabet shares three years ago at an average of $94 each.
Alphabet Class C stock traded at $392 on Friday.
"Shares are trading at one of the lowest levels seen in the past decade. We do not think that's justified," said Matt Britzman, senior equity analyst at Hargreaves Lansdown. The Microsoft move is Ackman's latest tech swing after buying Meta in February, Amazon shortly after U.S. tariffs hit in April, and Alphabet in late 2022.
It comes just weeks after Pershing Square Inc. and Pershing Square USA wrapped up a combined $5 billion IPO on the NYSE.
Microsoft shares rose more than 3% in early trading Friday.
