Billionaire investor Bill Ackman has revealed a significant new position in Microsoft (MSFT), announcing Friday that his hedge fund Pershing Square (PS) quietly accumulated shares starting in February when the stock tumbled following disappointing fiscal Q2 2026 earnings. The Warren Buffett disciple secured his stake at 21 times forward earnings—essentially market average pricing for a company that, until recently, commanded a premium valuation befitting its dominance in enterprise software and cloud computing. In a market where AI anxiety has investors second-guessing every Big Tech name, Ackman is betting that Wall Street has fundamentally mispriced the Redmond giant’s future.
The Discount That Caught a Contrarian’s Eye
Microsoft shares have declined nearly 12-15% in 2026, creating what Ackman characterizes as “a highly attractive valuation” for a firm his team has monitored for years. The current pricing doesn’t account for Microsoft’s approximately 27% economic interest in OpenAI, which Ackman estimates is worth around $200 billion—roughly 7% of Microsoft’s total market capitalization based on OpenAI’s most recent funding round. For perspective, Microsoft reported fiscal Q3 2026 earnings of $4.27 per share on revenues of $82.89 billion (up 18% year-over-year), while Azure cloud services expanded 40% and the AI segment hit an annualized run rate of $37 billion, representing 123% growth. These aren’t exactly the numbers of a struggling enterprise, which makes the sell-off look less like rational repricing and more like an opportunity for patient capital.
The M365 Moat Investors Are Underestimating
The market’s primary concerns center on two questions: Can Microsoft 365 withstand competition from sophisticated AI offerings like Anthropic’s Claude Cowork, and will Azure’s growth trajectory endure as Microsoft’s relationship with OpenAI evolves? Ackman argues that investors are significantly undervaluing the resilience of the M365 suite, which is “intricately woven into the daily operations of nearly every major corporation” and reinforced by Microsoft’s security, compliance, and data governance framework that would be exceedingly difficult to replicate. Unlike standalone software vulnerable to disruption by superior AI alternatives, M365 benefits from deep enterprise integration and compelling price-value economics, with monthly average revenue per user creating attractive bundle economics. The addition of Copilot AI assistant at $30 per user monthly provides a substantial monetization pathway as enterprises embrace AI-powered productivity tools.
The OpenAI Partnership: Divorce Rumors Greatly Exaggerated
Critics pointed to Microsoft and OpenAI’s revised partnership agreement announced in late April 2026 as evidence of a weakening relationship, but Ackman frames it differently. The restructured deal caps revenue share payments to Microsoft through 2030, allows OpenAI to serve customers across multiple cloud platforms, and removes Microsoft’s exclusive license to OpenAI’s intellectual property—changes that initially spooked investors. However, Ackman views the arrangement “not as a concession but as part of a deliberate pivot toward a more open, multi-model architecture that better serves enterprise customers”. Microsoft continues to receive 20% of OpenAI’s revenue from ChatGPT and its API platform, including income from services delivered on competing clouds like AWS, while remaining OpenAI’s primary cloud provider. For a company transitioning from per-seat pricing to hybrid consumption-based models that capture AI agent usage, the flexibility to offer multi-model solutions may prove more valuable than exclusivity.
A Conviction Play From a Billionaire Known for Going Big
While the exact size of Ackman’s Microsoft position awaits disclosure in the Q1 2026 13F filing due Friday, market observers expect this to become one of Pershing Square’s top three holdings—potentially rivaling the fund’s $2.8 billion Brookfield position. Ackman emphasized his optimism regarding Microsoft’s R&D commitment, particularly CEO Satya Nadella’s direct involvement with Copilot development, stating “we believe these initiatives will result in enhanced product development and increased customer engagement over time”. The investment thesis rests on Azure’s market dominance and M365 Copilot monetization positioning Microsoft as the leader in enterprise AI adoption during a period when the company trades at a rare discount. For an investor who built his reputation on deep conviction plays in undervalued large-cap technology firms like Alphabet, calling Microsoft “underpriced” in May 2026 represents a significant endorsement that could shift sentiment as the market reassesses its AI anxieties.
The Sources
- https://finance.yahoo.com/markets/article/billionaire-investor-bill-ackman-is-suddenly-bullish-on-openai-partner-microsoft-110233117.html
- https://fortune.com/2026/05/15/bill-ackman-microsoft-stock-openai-azure-spending/
- https://www.businessinsider.com/bill-ackman-microsoft-stock-investing-portfolio-billionaires-tech-ai-azure-2026-5
- https://www.facebook.com/yahoofinance/posts/bill-ackman-is-logging-into-a-massive-new-position-microsoft/1343759974285444/
- https://cryptorank.io/news/feed/e5362-why-is-bill-ackman-betting-on-microsoft-as-ai-fears-hammer-the-stock
- https://www.ciodive.com/news/microsoft-openai-rework-partnership/818606/
- https://www.cnbc.com/2026/05/15/bill-ackman-gets-into-microsoft-for-reasons-similar-to-cramers-arguments-to-hold-it.html
- https://www.wsj.com/finance
- https://www.facebook.com/cointelegraph/posts/-huge-billionaire-investor-bill-ackman-is-buying-more-microsoft-after-its-15-dro/12
- https://www.cnbc.com/2026/04/27/openai-microsoft-partnership-revenue-cap.html
- https://finance.yahoo.com/markets/stocks/articles/bill-ackman-just-bought-microsoft-141829184.html
- https://www.wsj.com
- https://finance.biggo.com/news/q9W_K54BLfE1EzqP6Xhq
- https://www.theverge.com/tech/921210/microsoft-openai-partnership-divorce-notepad
- https://www.reddit.com/r/ValueInvesting/comments/1tdszzk/bill_ackmans_pershing_square_bets_on_microsofts/
- https://www.wsj.com/finance/investing/ackman-says-pershing-square-has-taken-new-stake-in-microsoft-b68120d9
- https://finance.yahoo.com/markets/stocks/articles/ackmans-pershing-square-takes-stake-092754300.html
- https://nypost.com/2026/05/15/business/bill-ackmans-pershing-square-discloses-microsoft-stake-touts-deeply-embedded-software/
