Pershing Square builds $2.4B Microsoft stake

Bill Ackman said on May 15 that Pershing Square had built a new position in Microsoft after a sell-off that followed the software company's fiscal second-quarter earnings report. Ackman disclosed the investment in a post on X ahead of Pershing Square's quarterly 13F filing with the U.S. Securities and Exchange Commission, saying the stock's decline created what he called a compelling entry point. (money.usnews.com) Reuters reported that Pershing also sold its long-held Alphabet investment to help fund the Microsoft purchase. Microsoft shares had fallen about 15% this year at that point, according to Reuters. (finance.yahoo.com) ### How big is the Microsoft position? Pershing Square's 13F filing showed the fund owned about 5.65 million Microsoft shares worth roughly $2.09 billion as of March 31. (investing.com) Bloomberg reported the stake at about $2.1 billion, while some later reports valued it closer to $2.3 billion based on May 15 prices. Ackman called Microsoft a "core holding," signaling the position was not a small trade. May 15 was the date Pershing disclosed the position publicly, but Ackman said the fund began accumulating shares in February. CNBC reported that Ackman said Pershing established the position at about 21 times forward earnings, which he said was broadly in line with the market multiple and below Microsoft's recent historical average. (money.usnews.com) ### Why did Ackman start buying after Microsoft's drop? Microsoft's January 28 earnings report triggered the pullback that Ackman said opened the buying window. Reuters reported that investors were unsettled by slower cloud growth and record artificial-intelligence spending, sending the shares down 6.5% in after-hours trading. CNBC reported the stock fell 7% that day after Microsoft posted quarterly capital expenditures and finance leases of $37.5 billion, above Wall Street expectations. (finance.yahoo.com) February was when Pershing began buying, according to Ackman. He said investors had become overly concerned about Microsoft's competitive position in AI and about the durability of Azure growth. Reuters said Ackman argued those concerns were overblown and described Microsoft's valuation as "highly compelling" after the decline. (cnbc.com) ### What is Ackman actually betting on inside Microsoft? Ackman said Microsoft's Azure cloud division and M365 productivity suite are the two businesses at the center of his thesis. Reuters reported that he described them as two of the most valuable enterprise technology businesses and said the $30-a-month Copilot AI assistant sits inside that ecosystem. (money.usnews.com) CNBC said Ackman argued Microsoft's Office products remain deeply embedded in enterprises because of the company's security, compliance and identity infrastructure. Microsoft's own results provide the backdrop for that argument. The company said on January 28 that fiscal second-quarter revenue rose 17% to $81.3 billion. (money.usnews.com) On April 29, Microsoft reported fiscal third-quarter revenue of $82.9 billion and said Azure and other cloud services revenue grew 40%, while the company projected 39% to 40% Azure growth for the following quarter. ### How did Pershing pay for the trade? Ackman said Pershing sold Alphabet shares to help fund the Microsoft purchase. Reuters reported that Pershing's March 31 filing would still show some Alphabet shares at quarter-end, but a person familiar with the portfolio said Ackman fully liquidated the position in the second quarter. On May 17, Ackman said on X, as reported by CNBC, that the Alphabet sale was not a bearish call on Google but a source of funds given Pershing's finite capital base. (money.usnews.com) The portfolio shift came as Pershing was also expanding its public-market vehicles. CNBC reported that Ackman had recently listed Pershing Square USA, a closed-end fund marketed to retail investors, on the New York Stock Exchange, and said Microsoft had also become a core holding there. (microsoft.com) ### What will investors watch next? April 29 gave investors one answer on Azure when Microsoft posted 40% growth and lifted its 2026 capital spending plan to $190 billion. Reuters reported that the capex figure was above expectations even as Azure guidance for the current quarter also topped Wall Street estimates. That leaves Microsoft's next quarterly report, expected in late July, as the next major test of whether cloud growth and AI demand continue to justify the spending pace that Ackman has defended. (money.usnews.com) (investing.com) (dnyuz.com)