Key Takeaways:
Prominent investor Bill Ackman said his fund, Pershing Square, has established a large new position in Microsoft Corp. (MSFT), causing the software giant’s pre-market stock decline to shrink to just 0.3 percent on May 15.
"Pershing Square has a large position in Microsoft," Ackman said in a statement, adding that the fund will disclose the new stake in the near future.
The exact size and value of the investment have not yet been disclosed. The addition of Microsoft adds another mega-cap technology firm to Pershing's portfolio, which already includes a significant holding in Google parent company Alphabet Inc. (GOOGL).
Ackman’s investment acts as a significant vote of confidence in Microsoft’s valuation and its leadership position in artificial intelligence. The move comes shortly after Ackman commented that high-quality businesses are "stupidly cheap," suggesting he sees significant value in Microsoft shares, which trade at roughly 21 times forward price-to-earnings.
The new stake suggests Ackman believes the market is still under-pricing the value of Microsoft's enterprise AI offerings, including its Copilot assistants and Azure cloud services. While some investors have been cautious about the pace of AI monetization, Pershing Square’s investment implies a strong conviction in the company's long-term earnings power. Other large-cap tech stocks, such as Meta Platforms (META), are also trading at historically low forward earnings multiples.
The investment from one of Wall Street's most-watched activists signals a belief that Microsoft remains undervalued, even as one of the world's largest companies. Investors will now await Pershing Square’s upcoming 13F filing to learn the precise size of the stake.
This article is for informational purposes only and does not constitute investment advice.
