Investing.com — Pershing Square disclosed a new position in Microsoft Corp (NASDAQ:MSFT) on Friday, with billionaire investor Bill Ackman citing the recent market volatility as an opportunity to acquire what he described as a dominant franchise at an attractive valuation.
Ackman stated that short-term investors have overreacted to temporary headwinds, creating an entry point for long-term investors. He compared this situation to previous investments in Alphabet and Meta during periods of market uncertainty.
The hedge fund manager focused on Microsoft’s enterprise distribution capabilities, noting that M365 and Azure generate approximately 70% of the company’s profits. He highlighted the platforms’ retention rates, which he attributed to their security and compliance infrastructure.
“As two of the largest forces in equity markets converge, we have found occasional opportunities to acquire some of the most dominant long-term compounding franchises at attractive valuations,” Ackman said.
M365, with 450 million daily users, serves as the primary platform for enterprise productivity software. Azure continues to benefit from cloud migration, with AI workloads now contributing to growth.
Ackman addressed recent investor concerns regarding competition from AI labs like Anthropic and its Claude Cowork platform. He argued that M365’s integration and pricing structure, at $20 average revenue per user compared to double that for standalone applications, create barriers to replacement.
Regarding Microsoft’s relationship with OpenAI, Ackman viewed the shift toward a multi-model architecture as a strategic advantage rather than a weakness.
“We view Microsoft’s recent decision to restructure its OpenAI partnership not as a concession but as part of a deliberate pivot toward a more open, multi-model architecture,” he stated.
Pershing Square began purchasing shares in February 2026 following the company’s fiscal second-quarter results. At the time of the initial purchases, Microsoft traded at 21 times forward earnings, below historical averages.
Ackman noted that the valuation does not reflect Microsoft’s approximately 27% economic interest in OpenAI, which he valued at roughly $200 billion based on OpenAI’s most recent funding round.
The investor expressed confidence in Microsoft’s $190 billion capital expenditure budget for 2026, characterizing it as growth investment. He also pointed to the transition from per-seat pricing to metered consumption as a potential revenue driver as AI agents increase platform usage.
