Bill Ackman is betting big on Microsoft’s success in the age of AI.
Billionaire investor Ackman revealed Friday that his hedge fund, Pershing Square Capital Management, has invested in Microsoft, saying he has been tracking the company for years and now has a “very compelling valuation.”
Ackman highlighted Microsoft stock in his X post, saying his team “occasionally finds opportunities to acquire some of the most powerful long-term compounding franchises at attractive valuations.”
He cited Alphabet, Amazon, and Meta as recent examples.
Ackman explained the bet on Microsoft by pointing to the company’s ownership of “two of the most valuable franchises in enterprise technology”: M365, a software suite that includes Word, Excel, and Powerpoint, and Azure, a cloud platform that is benefiting from “a surge in demand for AI inference workloads.”
He also highlighted that Microsoft owns LinkedIn, Xbox, Activision Blizzard, Bing, and Edge.
Ackman said the position would be formally disclosed later on Friday when his hedge fund, Pershing Square Capital Management, releases an SEC filing known as a 13F listing the U.S. stocks it held as of March 31.
“$PSUS has no plans to file 13F tomorrow, but recently made $MFST a core holding,” he added.
In late April, he listed Pershing Square USA, a closed-end fund sold to individual investors, on the New York Stock Exchange.
Ackman said his team began investing in Microsoft in February after the company’s stock price fell following its second-quarter earnings report at the end of January. They are investing at 21 times forward earnings, “significantly below Microsoft’s trading average over the past several years,” he added.
He wrote that the company’s valuation “does not reflect the value of Microsoft’s approximately 27% economic interest in OpenAI, which at OpenAI’s most recent funding round valuation was approximately $200 billion, or 7% of Microsoft’s market capitalization.”
Ackman attributed the Microsoft sale to investor concerns about how M365 would fare against new competitors such as Anthropic’s Claude Cowork and whether Azure’s growth would be sustained.
He argued that investors are underestimating M365’s resilience, given that it is “deeply integrated” into enterprise workflows and has an attractive price tag.
Regarding Azure, Ackman noted that the platform’s revenue surged 39% in constant currencies last quarter, leading Microsoft toward a modest acceleration in the second half of this year.
He also supported Microsoft’s plan to invest about $190 billion this calendar year in “growth capital investments that will drive future revenue generation.”
Microsoft stock fell slightly in premarket trading on Friday. As of Thursday’s close, the stock is down about 15% since the beginning of the year, while the S&P 500 index has risen nearly 10% over the same period to a record high.
Ackman’s hedge fund, Pershing Square Capital Management, owned about $2.1 billion in Alphabet stock, $2.2 billion in Amazon stock and $1.8 billion in Meta stock at the end of December, according to its latest 13F filing.
Those positions, along with a $2.8 billion bet on Brookfield and a $2.5 billion bet on Uber, were among the largest in the company’s 10-stock portfolio.
“Like our purchases of $GOOG, $AMZN, and $META, we believe $MSFT offers similarly compelling long-term value at today’s valuations,” Ackman wrote to X.