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Ackman's Pershing Square takes Microsoft stake, exits Google parent Alphabet

📉 Bill Ackman of Pershing Square fully liquidated his stake in Alphabet during the second quarter after holding shares through the end of the first quarter.

💰 Ackman used proceeds from selling his three-year-old Alphabet position (bought at $94/share) to acquire a new stake in Microsoft following its recent stock decline.

🔒 Pershing Square plans to detail the specific trade details in a regulatory filing with the SEC later on Friday, confirming Ackman no longer owns any Alphabet shares.

🤖 Ackman views Microsoft as a compelling investment due to its dominance in enterprise AI through Azure cloud and M365 Copilot, which he believes are central to rising business AI adoption.

📉 The new Microsoft position was built in February after Pershing Square saw shares slump on concerns about slower cloud revenue growth and increased spending.

💬 Ackman defended the restructuring of Microsoft's OpenAI partnership, characterizing it as a strategic pivot toward an open multi-model architecture rather than a concession to rivals.

🔭 Ackman supports Microsoft's $190 billion spending plan for 2026, arguing that such investment is essential to fuel future revenue growth.

📈 Microsoft shares rose more than 3% in early trading after the news of Ackman’s new stake and his bullish comments on the company's valuation.

💼 Ackman stated that Pershing Square USA has made Microsoft a core holding within its new closed-end fund, though no separate filing is expected for that specific vehicle.

📉 Analyst Matt Britzman from Hargreaves Lansdown noted that Ackman's stake aligns with the view that Microsoft is undervalued and trading at low levels not seen in a decade.

🌍 Pershing Square has previously bought Amazon and Meta stocks to capitalize on attractive valuations following market volatility caused by tariffs and massive spending forecasts respectively.

Bullish Signals
  • Microsoft's shares rallied more than 3% in early trading following Bill Ackman's significant new stake, signaling strong bullish sentiment from a prominent investor.
  • Analysts note that Microsoft is trading at one of the lowest valuations seen in the past decade, suggesting significant upside potential as investors expect the stock to re-rate from current levels.
  • Ackman views the OpenAI partnership restructuring not as a concession but as a strategic pivot toward a more open architecture that better serves enterprise customers.
  • The company's $190 billion spending plan for 2026 is endorsed by Ackman as essential fuel for future revenue growth and long-term dominance in AI adoption.
  • Microsoft's Azure cloud division and M365 Office productivity suite with its $30-a-month Copilot AI assistant position it at the center of rising business AI adoption.
  • Pershing Square USA has designated Microsoft as a core holding, confirming confidence in the company's long-term growth prospects despite recent market volatility.
Risk Factors
  • Bill Ackman fully liquidated his entire stake in Google parent Alphabet in the second quarter, signaling a complete loss of confidence in the company's current prospects.
  • Ackman purchased Microsoft shares after its stock dropped due to slower cloud revenue growth and a surge in spending, highlighting concerns about profitability and capital efficiency.
  • Investors remain concerned about slow adoption of Microsoft's Copilot AI assistant despite its $30-a-month pricing point.
  • Changes to the OpenAI partnership strip Microsoft of exclusive rights to resell the startup's technology on its cloud, potentially limiting its competitive moat in generative AI.
  • Microsoft faces intensifying competition as rivals Google and Amazon make strong progress in their own AI efforts, threatening market share.
  • The company's massive $190 billion spending plan for 2026 raises questions about whether such aggressive capital expenditure can sustainably fuel future revenue growth.
Full Analysis
Billionaire investor Bill Ackman and his firm, Pershing Square Capital Management, have exited their investment in Google's parent company, Alphabet, to acquire a new stake in Microsoft. Regulatory filings indicate that Pershing Square held some Alphabet shares at the end of the first quarter but fully liquidated the position during the second quarter. The fund had originally purchased its Alphabet shares three years ago for an average price of $94 per share. Ackman explained on social media platform X that this sale provided the capital needed to build a new Microsoft position after the technology giant's stock price recently declined. The decision to pivot from Alphabet to Microsoft stems from Ackman's view that Microsoft now sits at a "highly compelling valuation." He argues that concerns surrounding Microsoft are overblown, specifically regarding slower cloud revenue growth, increased spending, and changes to its OpenAI partnership which stripped the company of exclusive rights to resell AI technology on its cloud. Ackman views the restructuring as a deliberate pivot toward a more open, multi-model architecture better suited for enterprise customers. He supports Microsoft's plan to spend $190 billion in 2026 to fuel future revenue growth and highlights the value of its Azure cloud division and M365 Office productivity suite, which includes the $30-a-month Copilot AI assistant as central to rising enterprise AI adoption. Pershing Square began building its Microsoft position in February, coinciding with a 15% drop in Microsoft's stock price for the year, while rivals Google and Amazon have made strong progress in their own AI efforts. Ackman also noted that his new closed-end fund, Pershing Square USA, has designated Microsoft as a core holding. Following the news of Ackman's new position, Microsoft shares rose more than 3% in early trading. Matt Britzman, a senior equity analyst at Hargreaves Lansdown, commented that Ackman's stake aligns with the view that Microsoft has scope to re-rate from current levels, noting shares are trading at one of the lowest levels seen in the past decade. This investment follows similar moves where Pershing Square bought Amazon following tariff announcements by President Donald Trump and more recently Meta after its massive spending forecast rattled investors.