Bill Ackman built Microsoft stake in first quarter during sell-off, betting on AI and cloud growth

Bill Ackman’s Pershing Square has built a position in Microsoft, as the hedge fund manager said the software giant’s recent pullback created a rare opportunity to buy one of the world’s dominant technology franchises at a compelling valuation.

Ackman disclosed the investment in a lengthy post Friday ahead of his firm’s quarterly 13F filing, saying Pershing Square began accumulating shares in February after Microsoft’s stock declined following its fiscal second-quarter earnings report.

“We were able to establish our position at a valuation of 21 times forward earnings, broadly in line with the market multiple and well below Microsoft’s trading average over the last few years,” Ackman wrote. While Ackman didn’t note the size of his stake in the tech giant, he called it a “core holding.”

In a separate post on Saturday, Ackman said his company used the sale of shares of Google parernt Alphabet to help fund the Microsoft share acquisition.

“To be clear, our sale of $GOOG was not a bet against the company. We are very bullish long term on Alphabet. But at current valuations and in light of our finite capital base, we used $GOOG as a source of funds for $MSFT,” Ackman wrote.

Microsoft shares have fallen more than 26% from their record high reached in July 2025. The sell-off was driven largely by fears that artificial intelligence will eat software and specifically that Microsoft’s hefty AI investments won’t produce the desired results.

The hedge fund manager said investors have become overly concerned about Microsoft’s competitive positioning in AI and the durability of growth at its Azure cloud business. He said the company’s Office productivity suite, known as M365, remains deeply embedded across enterprises and difficult to replicate because of Microsoft’s security, compliance and identity infrastructure.

“We are encouraged to see Microsoft prioritizing its R&D efforts and investment in Copilot, its own AI agent embedded across M365, with direct involvement from CEO Satya Nadella. We believe these efforts will translate into improved product velocity and greater customer adoption over time,” Ackman said.

Ackman compared the investment to previous Pershing Square purchases of Alphabet, Amazon and Meta, which he said were acquired during periods of market skepticism around artificial intelligence competition and spending.

The move followed Ackman’s initial public offerings of closed-end fund Pershing Square USA Ltd., which began trading under the ticker PSUS, and asset manager Pershing Square Inc., listed as PS, last month. The dual structure allows investors to gain exposure either to the underlying portfolio or to the management business itself. PSUS last traded at $41.68, below its IPO price of $50.