Why Bill Ackman Switched From Google to Microsoft (MSFT) Stock

Key Takeaways

• Pershing Square revealed a fresh Microsoft (MSFT) stake through its 13F filing released Friday
• The position was initiated in February when shares traded at approximately 21x forward P/E, matching broader market valuations
• Ackman financed the Microsoft buy by exiting his Alphabet (GOOGL) holdings, clarifying this wasn’t a bearish stance on Google
• Shares of Microsoft jumped 3% Friday, though they remain down 17% for the year against the S&P 500’s 10% advance
• The billionaire investor argues Microsoft’s OpenAI ownership (~$200B value, roughly 7% of its market cap) remains underappreciated by markets

Billionaire investor Bill Ackman revealed Pershing Square has established a significant position in Microsoft (MSFT) through regulatory filings submitted Friday. Shares responded positively, climbing 3% to finish at $421.92.

Microsoft Corporation, MSFT

According to Ackman, the position was initiated in February following a “substantial” selloff that came after Microsoft reported fiscal Q2 2026 results. The fund accumulated shares at approximately 21 times forward earnings — a valuation matching the broader S&P 500 and significantly below Microsoft’s historical trading range.

The tech giant has faced headwinds in 2026. Shares have declined 17% year-to-date, contrasting sharply with the S&P 500’s 10% gain.

The weakness followed a disappointing Q3 earnings announcement that sparked concerns regarding Azure’s expansion rate. Microsoft further revealed plans for $190 billion in capital spending for calendar 2026 — representing a 61% annual increase and exceeding analyst expectations by roughly $35 billion.

While Ackman recognizes these challenges, he maintains the market is overlooking a critical asset.

The Hidden Value in OpenAI

Ackman highlighted Microsoft’s 27% ownership in OpenAI, which he estimates carries a $200 billion valuation — equivalent to approximately 7% of Microsoft’s total market capitalization. He contends this substantial value remains absent from current share prices.

The investor also dismissed concerns about Microsoft 365 facing displacement from AI competitors. He maintains that M365’s deep integration across enterprise systems — encompassing identity management, security infrastructure, compliance frameworks, and data governance — creates formidable barriers against replacement by emerging AI applications.

“Unlike point software solutions, which may be vulnerable to disintermediation by better-performing AI alternatives, M365 is tightly integrated into the daily workflow of nearly every large enterprise,” Ackman wrote on X.

Ackman liquidated his Alphabet position to generate capital for the Microsoft investment. He took to social media Saturday to emphasize this wasn’t a negative signal regarding Google’s prospects.

No Loss of Faith in Google

“Our sale of Google was not a bet against the company. We are very bullish long term on Alphabet. But at current valuations and in light of our finite capital base, we used it as a source of funds for Microsoft,” Ackman wrote.

Wedbush analyst Dan Ives endorsed Ackman’s decision. He suggested Wall Street continues underestimating Azure’s growth potential and identified Microsoft among his “favorite large cap tech names to own over the coming years.”

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From a technical perspective, Evercore ISI’s Rich Ross observed Microsoft displays one of the “best acting charts” among technology stocks currently, noting the shares have recaptured their 50-day moving average with “authority” and retreated to a long-standing support level that’s remained intact since the European debt crisis.

Ackman’s track record with major technology investments includes his previous long-term Alphabet position before this strategic shift to Microsoft.