Most investors are running from Microsoft's AI problem. Bill Ackman was buying.
His firm, Pershing Square, built a new Microsoft stake in the first quarter. Ackman called the price "compelling" - around 21 times next year's earnings. That is in line with the broader market. It is also well below where Microsoft has traded over the last few years.
Microsoft has fallen more than 26% from its record high in July 2025. The drop has one source. That source is AI fear.
Investors started to worry that AI tools could eat into Microsoft's big software business. They also worry that the company's huge AI spending will not pay off the way it has been promised.
Ackman thinks the fear is overdone. He laid out his case in a Friday post ahead of Pershing Square's quarterly 13F filing. In it, he said investors are too worried about Microsoft's spot in AI and the growth at Azure, the cloud unit.
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Ackman's case for Microsoft starts with Office. The suite is now called M365. It is built deep into how big firms run. It plugs into safety, rule-following, and login tools that customers already pay for. That makes it sticky.
Ackman also called out Copilot. That is the AI helper Microsoft is putting inside M365 with direct input from CEO Satya Nadella. His view is that Copilot will lead to better products and more customer use over time.
He did not say how much Pershing Square bought. He labeled the position a "core holding." In investor talk, that means "we plan to hold this for a long time."
The set-up is one Ackman has seen before. A high-quality firm sells off on a fear story. He buys. He waits. The fear fades.
Ackman compared the Microsoft trade to past Pershing Square bets on Alphabet, Amazon, and Meta. Each of those was bought during a stretch when investors were nervous about AI threats and spending.
That track record is the case for the trade. Buy a top brand. Buy it when the crowd is nervous. Hold it. Then let the business win the argument.
The Microsoft trade comes right after Ackman took two of his own vehicles public. Pershing Square USA Ltd. trades as PSUS. The firm itself, Pershing Square Inc., trades as PS. Both started to trade last month.
PSUS is around $41.68. The IPO price was $50. So the new funds have not had an easy welcome either. If Ackman is right about Microsoft, this looks like a repeat of his Alphabet trade.
Pershing Square will file the full 13F soon. That will show how big the new stake is. Until then, "core holding" is the only size clue Ackman has put on the table.
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