Bill Ackman, the founder and CEO of Pershing Square Inc., has announced his hedge fund’s investment in Microsoft. Ackman described the recent stock price decline as a unique opportunity to acquire shares in the tech giant at an attractive valuation. He revealed in a detailed post that Pershing Square began purchasing Microsoft shares in February, following a drop in the company’s stock price after its fiscal second-quarter earnings report.
Ackman highlighted that the investment was made at a valuation of 21 times forward earnings, aligning with market averages but significantly lower than Microsoft’s historical trading valuations. Although he did not disclose the exact size of the investment, he referred to it as a "core holding."
To finance the acquisition, Pershing Square sold shares of Alphabet, the parent company of Google. Ackman clarified that this sale was not indicative of a downturn in confidence regarding Alphabet, as his firm remains optimistic about the company’s long-term prospects. Rather, the decision was influenced by the need to reallocate capital.
Microsoft’s shares have recently declined over 26% from their peak in July 2025, amid concerns regarding its AI investments and the competitive landscape within that domain. Ackman urged that these apprehensions around Microsoft’s market position and the future growth of its Azure cloud services are overstated. He emphasized the strength of Microsoft’s Office productivity suite, noting its entrenched presence and difficulty in replication within enterprises.
Ackman compared this investment strategy to prior acquisitions in Alphabet, Amazon, and Meta, which were made during periods of market skepticism regarding AI.
These developments come on the heels of Pershing Square’s recent IPOs—Pershing Square USA Ltd. and Pershing Square Inc., providing investors with options to engage with either the underlying portfolio or the management business.
Why this story matters: Concerns over Microsoft’s competitive position in AI and cloud services highlight broader market trepidations regarding tech investments.
Key takeaway: Ackman’s investment strategy emphasizes finding value in established companies amid market dips.
Opposing viewpoint: Critics may argue that investing heavily in a company facing significant stock downturns and AI competition could be risky.
