Bill Ackman announced that his hedge fund, Pershing Square, has established a new position in Microsoft, arguing that the software giant's core business is undervalued by the market and possesses a moat that is "virtually impossible to replicate."
Ackman stated on platform X on Friday that Pershing Square began building the position this February and would file the relevant disclosure with regulators that day, simultaneously classifying Microsoft as a core holding.
He indicated that the Microsoft 365 suite is "deeply embedded" within large enterprises, creating a moat "virtually impossible to replicate," while strong demand for the Azure cloud service proves that external concerns about its growth prospects are "completely misplaced."
Concurrently, Ackman revealed a reduction in his stake in Alphabet. According to Bloomberg data, Pershing Square sold approximately 4.1 million shares of Alphabet last December, leaving only about 678,000 shares at that time. This recent statement further confirms his ongoing position reduction regarding Google.
On Friday, Microsoft's stock closed up 3.05%, while Alphabet's Class A shares closed down 1.07%.
**Why Microsoft Attracts Ackman**
Ackman positions Microsoft as one of the most valuable assets in enterprise technology.
He stated that the Microsoft 365 suite, including Word and Excel, is "deeply embedded" in large corporations, and the moat built upon the company's existing infrastructure is "virtually impossible to replicate." Meanwhile, the robust demand for the Azure cloud service demonstrates that external worries about its growth trajectory are "completely misplaced."
Microsoft's stock price has faced pressure this year, with market concerns primarily centered on two points: First, the enterprise adoption rate of the AI assistant Copilot is lower than expected. Second, there are questions about whether the 365 business can maintain its market share amid competitive pressures. Additionally, Microsoft is confronting challenges with data center capacity expansion lagging behind the growth in cloud demand. Ackman believes this very stock price correction has presented Pershing Square with an attractive entry opportunity.
Regarding the adjustment in Microsoft's partnership with OpenAI, Ackman also offered an interpretation that diverges from the mainstream market view.
In April, Microsoft relinquished its exclusive rights to sell OpenAI's models, a move widely perceived as a concession by Microsoft. Ackman, however, views this as Microsoft "intentionally transitioning towards a more open, multi-model architecture," which he believes is more beneficial for serving enterprise clients rather than being a simple retreat.
**Entering Against the Trend with a Long-Term View**
In his X post, Ackman also elaborated on the current market structure, pointing out that two forces are converging: the expanding scale of index-based ownership and a significant pool of capital controlled by extremely short-term, highly leveraged investors with low tolerance for volatility. Ackman posits that the combination of these forces occasionally creates buying windows for high-quality assets.
This assertion forms the macro backdrop for his Microsoft position: when the market systematically sells off quality assets due to short-term fluctuations, focused, long-term-oriented concentrated investors can seize the opportunity to establish positions.
This initiation of a Microsoft position represents the latest expansion of Pershing Square's major technology portfolio. The fund currently holds significant positions in Amazon and Meta Platforms, Inc., and the addition of Microsoft further concentrates its technology sector exposure.
When Pershing Square established its position in Meta, Ackman similarly stated that investors were underestimating the company's long-term AI potential. Last year, when disclosing the Amazon stake, he predicted the company would emerge from a short-term downturn in its cloud business. The performance of these two stocks has diverged notably this year: Meta is down 6.3% year-to-date, while Amazon is up 16%.
According to Bloomberg, Ackman's current net worth is $12.5 billion. He is renowned in the industry as an activist investor, known for establishing concentrated positions in a very limited number of stocks and using social media to communicate his views prominently.
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