Pershing Square Capital Management Builds New Microsoft Stake
Bill Ackman revealed in a social media post on Friday that his firm, Pershing Square Capital Management, has established a new position in Microsoft. The stake was initiated in February 2025 following a notable dip in the technology giant's stock price. The position is expected to be formally disclosed in the firm’s upcoming quarterly regulatory filing.
Transaction Details
Pershing Square began accumulating shares after Microsoft's stock fell roughly 10% following its fiscal second-quarter earnings report.
- Valuation Entry Point: Ackman stated the position was built at a valuation of 21 times forward earnings, which he described as broadly in line with the broader market multiple.
- Core Holding: Ackman identified Microsoft as a "core holding" for the firm.
- Disclosure: The size of the stake has not yet been disclosed, but it will appear in the firm's 13F filing. Ackman's new closed-end fund, Pershing Square USA, also holds Microsoft but will not file a separate disclosure.
"The stake was initiated in February 2025 following a decline in the company's stock price."
Microsoft's Recent Performance
Microsoft's share price had experienced significant pressure prior to Ackman's move:
- Peak-to-Trough Decline: Down over 26% from its July 2025 peak.
- Year-to-Date: Down more than 15% .
- Closing Price: $409.43 in the prior session.
Multiple sources have attributed the decline to investor concerns regarding the returns on Microsoft’s massive AI investments, slower cloud revenue growth, and a surge in capital spending.
Despite the stock slide, the company reported quarterly revenue of $82.89 billion (an 18% year-over-year increase), with Azure revenue growing 40% . Microsoft also highlighted strong enterprise demand for its M365 Copilot tools, though it noted results may be affected by competition from Amazon and Google.
Investment Rationale
Ackman cited several key factors supporting the decision to buy:
- AI Skepticism is Overblown: He characterized concerns about slow adoption of the Copilot AI assistant as overblown.
- OpenAI Restructuring: He described the recent restructuring of Microsoft's partnership with OpenAI—which removed exclusive distribution rights—as a strategic pivot toward a more open, multi-model architecture that better serves enterprise customers.
- Moat: Ackman argued that Microsoft’s 365 productivity suite is "deeply embedded" in enterprises and difficult to replicate.
- Capital Spending: He supported Microsoft's $190 billion capital spending plan for 2026, describing it as an essential investment for future revenue growth rather than a threat to margins.
- Hidden Value: Ackman noted that Microsoft's current market capitalization does not yet reflect its 27% economic interest in OpenAI, which he valued at approximately $200 billion.
"Ackman supported Microsoft's $190 billion capital spending plan for 2026, describing it as an essential investment for future revenue growth rather than a threat to margins."
Analyst Commentary
Matt Britzman, senior equity analyst at Hargreaves Lansdown, provided perspective on the move:
"Ackman's stake aligns with our view that Microsoft has scope to re-rate from current levels. Shares are trading at one of the lowest levels seen in the past decade. We do not think that's justified."
Market Reaction
Following the disclosure, Microsoft shares rose more than 1% in early trading on Friday, with some reports indicating a 2% increase during the session.
Broader Investment Context
This investment continues a clear pattern for Pershing Square of taking positions in large technology companies during periods of AI-related market skepticism. The firm has previously invested in Alphabet, Amazon, and Meta under similar conditions.
Ackman’s investment strategy focuses on concentrating the portfolio in a small number of large companies when long-term opportunities arise.