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Bill Ackman announced Friday that Pershing Square has built a position in Microsoft, which he described as a rare opportunity to buy one of the world’s dominant technology franchises at a compelling valuation. Microsoft has fallen more than 26% from its July 2025 record high, driven by fears that AI will cannibalize software revenues and that Microsoft’s own AI investments won’t produce the returns the market paid for. Ackman bought in at 21 times forward earnings, roughly in line with the broader market multiple, and called it a core holding without disclosing the size of the stake.
The bull case is straightforward and Ackman makes it well. M365 is deeply embedded across enterprises in ways that are genuinely difficult to replicate. Azure is a real business growing at real rates. Copilot, Microsoft’s AI agent baked into the productivity suite, has direct involvement from Satya Nadella himself, which Ackman considers encouraging. He compared the entry point to Pershing Square’s previous purchases of Alphabet, Amazon, and Meta during periods of peak AI skepticism, all of which worked out.
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The bear case is that Microsoft has now missed on AI monetization expectations for two consecutive quarters and the stock has responded accordingly. Ackman is betting that Nadella figures it out. He probably will. But if he doesn’t, Ackman will be two disappointing quarters away from posting a 4,000-word thread about why Microsoft needs to bring back Clippy and fire the entire Azure leadership team.
Worth noting that Ackman made this disclosure ahead of Pershing Square’s quarterly 13F filing through a lengthy social media post, because that is how Bill Ackman communicates investment theses now. Remember when the SEC was a thing?
