Pershing Square $SQ Capital Management, the hedge fund run by Bill Ackman, has established a new position in Microsoft $MSFT on the argument that the market has not yet priced in what the software company stands to gain from artificial intelligence.
Writing on X $TWTR on Friday, Ackman said the firm started accumulating Microsoft shares in February, a period when the stock was under pressure after fourth-quarter earnings fell short of expectations — revenue growth in cloud computing came in below forecasts while capital expenditures surged. Pershing will disclose the stake in a regulatory filing Friday, he said.
Without specifying the dollar amount of the investment, Ackman characterized Microsoft as a "core holding" offered at a "highly compelling valuation." Microsoft has also been added as a core holding in Pershing Square USA, Ackman's recently launched closed-end fund that began trading on the NYSE last month, though that vehicle will not submit its own regulatory filing, he noted.
Central to the investment thesis, Ackman argued, are a pair of dominant product lines — the Azure cloud platform and the M365 Office suite, the latter of which bundles in the Copilot AI assistant at $30 a month — that together position the company at the heart of enterprise AI adoption, according to Reuters. Competitive pressures on Azure and the restructured OpenAI arrangement — under which Microsoft lost its sole right to distribute the startup's technology through its cloud infrastructure — have been exaggerated, Ackman said. The $190 billion that Microsoft has committed to spending in 2026 is a necessary investment to drive revenue growth down the line, Ackman added.
Shares of Microsoft have dropped over 15% since January, a slide driven by growing doubts about whether the company can hold onto the lead it established in AI as rivals Google $GOOGL and Amazon $AMZN accelerate their own competing efforts.
The Microsoft bet is the latest in a string of technology investments for Pershing Square. The pattern of opportunistic buying extends back several years: Ackman said Pershing entered Alphabet in 2022 when ChatGPT's launch sparked fears that Google's search dominance was at risk, moved into Amazon shortly after President Donald Trump's Liberation Day tariff announcement roiled markets last year, and most recently scooped up Meta $META shares following that company's disclosure of a sweeping spending plan that unnerved investors.