Bill Ackman Buys Microsoft as Pershing Square Sees Long-Term Value in MSFT
Pershing Square revealed a new investment position in Microsoft Corp., with billionaire investor Bill Ackman stating that recent market volatility created an opportunity to buy one of the world’s strongest technology businesses at an attractive valuation.
According to Ackman, short-term market concerns have caused investors to overreact to temporary challenges, opening the door for long-term buyers seeking quality assets.
He compared Microsoft’s current situation to previous investment opportunities in Alphabet and Meta, where uncertainty created favorable entry points.
Why Bill Ackman Believes Microsoft Stock Is Undervalued
Ackman argued that Microsoft’s valuation fails to fully reflect the strength of its core businesses and future AI potential.
Pershing Square began purchasing Microsoft shares in February 2026 following the company’s fiscal second-quarter earnings report. At the time, Microsoft traded at approximately 21 times forward earnings, below its historical valuation averages.
The investor believes this pricing underestimates Microsoft’s long-term growth prospects.
Microsoft’s M365 and Azure Drive Most Profits
A major part of Ackman’s bullish outlook centers on Microsoft’s enterprise ecosystem.
He noted that Microsoft 365 (M365) and Azure account for roughly 70% of the company’s profits, supported by strong customer retention rates and deeply integrated enterprise infrastructure.
According to Ackman, security features, compliance systems, and business integration make Microsoft’s products difficult for customers to replace.
Microsoft 365 currently serves around 450 million daily users, reinforcing its position as one of the dominant productivity platforms worldwide.
Meanwhile, Azure continues benefiting from ongoing cloud adoption and increasing demand for artificial intelligence workloads.
Ackman Dismisses AI Competition Concerns
Recent investor concerns have focused on competition from AI companies such as Anthropic and products including Claude Cowork.
However, Ackman believes Microsoft maintains a competitive advantage due to pricing and ecosystem integration.
He highlighted that Microsoft’s average revenue per user is roughly $20, significantly lower than many standalone AI applications, creating additional incentives for businesses to remain within Microsoft’s platform.
The investor argued these factors create barriers that limit customer switching.
Microsoft’s OpenAI Strategy Seen as a Strength
Ackman also addressed Microsoft’s evolving relationship with OpenAI.
Rather than viewing Microsoft’s move toward a broader multi-model AI strategy as a weakness, he described the shift as a calculated long-term advantage.
According to Ackman, diversifying beyond a single AI model could strengthen Microsoft’s flexibility and competitiveness as the artificial intelligence market evolves.
Microsoft’s OpenAI Stake May Be Underestimated
Ackman suggested that Microsoft’s valuation does not properly account for its estimated 27% economic interest in OpenAI.
Using OpenAI’s latest funding valuation, he estimated Microsoft’s stake could be worth around $200 billion, representing substantial hidden value not fully reflected in the company’s stock price.
Massive AI Spending Viewed as Growth Investment
Despite concerns surrounding rising technology spending, Ackman expressed confidence in Microsoft’s planned $190 billion capital expenditure budget for 2026.
He characterized these investments as long-term growth initiatives rather than excessive spending.
The investor also highlighted a potential transition from traditional software subscription pricing toward metered AI consumption models, which could unlock additional revenue streams as AI agents increase usage across Microsoft platforms.
For Ackman, expanding AI adoption, cloud growth, and Microsoft’s dominant enterprise position continue to support a bullish long-term outlook on the company.
