Bill Ackman’s Latest Bet: Microsoft Shares on Sale
Bill Ackman, a prominent investor known for his association with Warren Buffett, has turned his attention to Microsoft (MSFT), signalling a renewed confidence in the tech giant amid a difficult market.
Key Developments:
In a recent announcement via X, Ackman revealed that his hedge fund, Pershing Square (PS), is set to announce a new stake in Microsoft following a substantial share price decrease. Ackman highlighted that the stock is currently valued attractively.
"We commenced accumulating MSFT shares in February after a significant dip following their fiscal Q2 2026 report," Ackman noted, indicating that he secured shares at a valuation of 21 times forward earnings, which aligns with market averages and is significantly lower than Microsoft’s historical trading multiples.
Ackman further assessed that Microsoft’s share multiples fail to consider its 27% ownership in OpenAI, which he estimates could be valued around $200 billion—approximately 7% of Microsoft’s overall market value.
Market Sentiment and Challenges:
Ackman attributes the recent decline in Microsoft’s stock to investor concerns regarding two main issues: the competition faced by the M365 suite relative to advanced AI offerings (such as Anthropic’s Claude Cowork) and uncertainties about Azure’s growth trajectory, particularly amidst changes in Microsoft’s relationship with OpenAI.
Despite these concerns, Ackman remains optimistic about M365’s resilience, owing to its integral role in enterprise operations and the robust value it offers. He argues that unlike isolated software solutions, M365 is crucial in the daily workflows of many large enterprises, supported by comprehensive Microsoft infrastructures in security and data governance, making it hard to replicate.
Current Market Performance:
This year has been tough for Microsoft; its stock has dropped by 17%, contrasting sharply with a 10% rise in the S&P 500 (^GSPC). This decline can be traced back to less than impressive third-quarter earnings and emerging worries about their AI investments.
On their earnings call, Microsoft disclosed plans to escalate capital expenditures for 2026 to $190 billion—61% higher than the previous year—significantly exceeding initial market estimates of around $155 billion.
However, Rich Ross, chief technical analyst at Evercore ISI, mentioned that Microsoft is showing strong technical performance in the current market. He observed that the stock has regained its 50-day moving average and identifies it as a favourable choice for investors.
Outlook:
Despite the lack of enthusiasm surrounding Microsoft’s stock this year, improvements in technical set-ups and general market sentiment indicate that there may be a turnaround on the horizon. Ackman’s investment is a solid endorsement from a seasoned investor known for backing successful tech firms, such as Alphabet (GOOGL).
Analyst Dan Ives from Wedbush echoed this sentiment, stating that the market is still underestimating Azure’s growth potential as the company shifts its focus towards AI in the latter half of the fiscal year. Ives categorised Microsoft as one of the top large-cap tech stocks to consider moving forward.
In summary, as Ackman makes a strategic acquisition in Microsoft, it highlights an encouraging outlook for the company amid market fluctuations. Investors are closely watching developments, as a shift in market sentiment could herald a positive turnaround for Microsoft in the coming months.
