Ackman shifts from Google to Microsoft on AI optimism

Ackman’s Pershing Square sold Alphabet and bought into Microsoft, citing strong AI and cloud prospects, robust fundamentals, and undervalued strengths, despite recent stock declines and competitive risks.

Bill Ackman’s Pershing Square has made a notable shift by selling its entire Alphabet (Google) position and building a significant stake in Microsoft. This move follows a 13-15% year-to-date decline in Microsoft’s stock, which Ackman views as a “highly compelling valuation” amid concerns over AI and cloud competition. Ackman began accumulating Microsoft shares in February, making it a core holding in his new Pershing Square USA fund. He believes the market underestimates Microsoft’s strengths in Microsoft 365 and Azure, which generate about 70% of its profits. The company’s planned $190 billion investment in AI infrastructure further supports his bullish outlook. Microsoft’s fundamentals remain strong, with an 18% year-over-year revenue increase and Azure cloud revenue up 40%. The Copilot AI product has reached 20 million paid subscribers. While some funds like TCI have exited Microsoft over AI competition worries, Ackman sees Microsoft’s enterprise AI stack as resilient and expects future gains from its cloud and AI investments, though risks remain if competitors regain momentum.