Bill Ackman, founder of Pershing Square Capital Management, disclosed on Friday via his X posts that the hedge fund has been accumulating positions in Microsoft (MSFT) since February and classified the tech giant as one of its core holdings. The announcement immediately buoyed Microsoft’s pre-market stock price, wiping out early losses and sending shares higher.
Microsoft has lost 15% of its market value so far this year. Investor concerns have lingered over sluggish adoption of its Copilot AI tool, intensifying competition facing Microsoft 365, and insufficient data center capacity constraining cloud business growth. Against such widespread bearish sentiment, Ackman, who previously scored successful investments in Meta and Amazon, stepped in to scoop up Microsoft shares, targeting undervalued long-term strengths overlooked by the broader market.
Ackman holds firm bullish views on Microsoft’s unrivaled business moats. He regards Microsoft 365 office suites and Azure cloud services as two top-tier premium franchises in the enterprise tech space. Deeply embedded into daily operations of global corporations and backed by robust proprietary infrastructure, Microsoft’s ecosystem boasts barriers that are nearly insurmountable for competitors.
He also dismisses market jitters over Azure’s growth outlook as groundless, noting persistent strong market demand proves capacity shortages stem from booming business needs rather than slowing expansion. Regarding the revised OpenAI partnership reached in April, while most investors view Microsoft’s withdrawal from exclusive AI model sales rights as a compromise, Ackman argues it is a well-calibrated strategic shift. The adjustment is designed to build an open multi-model system to better serve enterprise clients.
Massive locked-in future revenue serves as solid financial backing for his investment thesis. Microsoft’s fiscal 2026 second-quarter earnings showed its commercial remaining performance obligations surged 110% year-on-year to $625 billion, equivalent to around 2.5 years of pre-confirmed contracted revenue. Excluding the $281 billion linked to OpenAI tie-ups, the leftover $344 billion still surpasses Amazon AWS’s total order backlog and doubles that of Google Cloud.
Microsoft CFO Amy Hood confirmed tight supply of GPUs, CPUs and storage will last through at least 2026. Such capacity limits are favorable bottlenecks, as every newly operational power facility can be converted into pending recognizable revenue.
The market generally labels Microsoft’s $190 billion annual capital expenditure plan as part of an AI infrastructure arms race against Amazon and Alphabet, which misreads its core strategy. Beyond global data center expansion, Microsoft is prioritizing stable energy supply to resolve fundamental constraints for AI computing. These land reserves, long-term energy deals and decades-lasting infrastructure assets are subject to strict regulatory approvals and cannot be quickly replicated by rivals.
Microsoft’s ongoing business model overhaul is another key growth driver recognized by Ackman. The company is shifting from traditional headcount-based software licensing to selling AI agents that function as digital employees, with each agent set as an independent billable seat. To date, Microsoft has secured over 15 million paid Copilot seats, generating more than $5.4 billion in annual recurring revenue from its software business alone.
Its new dual pricing mechanism also enhances operational resilience. Clients pay fixed base seat fees plus flexible usage-based charges, enabling Microsoft to secure steady subscription income and capture extra profits amid business scale expansion, forming an unprecedented revenue structure for the firm.
This contrarian investment move aligns with Ackman’s consistent investing style. He has long been keen on picking undervalued tech leaders when market sentiment turns negative, having foreseen long-term AI growth potential of Meta and cloud business recovery of Amazon in advance. By adding Microsoft to its portfolio, Pershing Square has completed its full layout across leading large-cap tech firms.
Amid prevailing hype over AI capital spending, investors tend to focus merely on heavy outlays while ignoring sufficient pre-locked revenue and well-planned long-term strategies. Ackman’s latest stake-building in Microsoft essentially bets on the company’s solid business barriers, forward-looking infrastructure deployment and transformative profit model that will unlock sustained long-term value.
