Bill Ackman's Pershing Square exited its Alphabet (GOOGL &ref=yanuki.com) position and acquired 5.65 million shares of Microsoft (MSFT &ref=yanuki.com) in Q1 2026.
Ackman believes Microsoft 365 is deeply integrated into enterprise workflows and that the market undervalues Microsoft's stake in OpenAI.
Microsoft's Azure growth is steady, but Alphabet's Google Cloud and Amazon's AWS are experiencing faster growth rates.
Microsoft's relationship with OpenAI has shifted, ending Azure exclusivity.
The market capitalization of Microsoft is $3.1T, with a day's range of $415.72 - $426.24
Ackman's rationale for the Microsoft investment centers on the company's strong position in enterprise software and its stake in OpenAI. He sees Microsoft 365 as a sticky product and believes the market is underestimating the value of OpenAI to Microsoft. However, while Microsoft's Azure cloud business is growing, competitors like Google Cloud and AWS are growing faster. Google Cloud revenue surged 63% year-over-year, while AWS grew 28%, its fastest pace in 15 quarters. The shift in Microsoft's relationship with OpenAI, ending Azure exclusivity, could also impact Microsoft's AI moat. Layered on top of all this is the broader concern that AI tools could eventually disintermediate traditional enterprise software, including parts of Microsoft 365.
Q: Why did Ackman sell Alphabet?
Ackman stated the sale wasn't a bet against Alphabet but a move to reallocate capital to Microsoft, which he sees as undervalued.
Q: Is Microsoft's cloud business growing?
Yes, but not as fast as its main competitors, Google Cloud and Amazon AWS.
Ackman's investment decisions are closely watched, but it's important to consider your own investment goals and risk tolerance. While Microsoft has strengths, its cloud growth is lagging behind competitors, and its AI strategy is evolving. Consider the faster growth of Google Cloud and AWS when making investment decisions.
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