Bill Ackman Just Bought Microsoft (Here's Why)

Ackman's Pattern: Buy Great Businesses When the Market Panics

If you have followed Bill Ackman closely over the past few years, a clear pattern has emerged. Pershing Square runs a concentrated portfolio and Ackman has been deliberately using moments of market fear or short-term overreaction to accumulate positions in some of the most dominant long-term compounding businesses in the world. He bought Alphabet when the stock sold off sharply on the release of ChatGPT in late 2022. He bought Amazon in the weeks following Liberation Day when tariff panic swept through markets. He bought Meta on the market's negative reaction to unexpectedly large capital expenditure guidance. In every case the thesis was the same: a world-class business temporarily mispriced because the market was reacting to noise rather than evaluating the long-term earnings power of the underlying franchise. Microsoft is the latest addition to that list. Pershing Square began building its position in February 2026 following a meaningful share price decline after the company reported its Q2 2026 results. Ackman was able to establish the position at approximately 21 times forward earnings — broadly in line with the overall market multiple and well below Microsoft's own trading average over recent years. For a business of Microsoft's quality, that is a compelling entry point.

Why Microsoft — Ackman's Thesis

M365: The Irreplaceable Operating System

Microsoft 365 is not just a productivity suite. It is the operating platform for the modern enterprise. Over 450 million workers use Word, Excel, PowerPoint, Outlook, and Teams every single day. That level of penetration, built over decades of enterprise relationships and deeply integrated workflows, creates a switching cost that is nearly impossible to quantify and almost impossible to overcome. Ackman's key insight on M365 is that it is not vulnerable to AI disruption in the way that point software solutions are. Unlike a standalone tool that could be replaced by a better AI alternative, M365 is woven into the identity, security, compliance, and data governance infrastructure of virtually every large enterprise on earth. You do not replace M365 — you build on top of it. The bundle economics reinforce this further. The monthly average revenue per user across the M365 suite is approximately $20 — less than half of what customers would pay to purchase the underlying applications individually from different vendors. That pricing creates extraordinary value for customers, which is exactly what makes the relationship so durable. Microsoft is also shifting from pure per-seat licensing to a hybrid model that includes metered consumption, allowing the company to capture incremental revenue as AI agents drive additional usage. M365 revenue grew 15% in constant currency last quarter.

Azure: The AI Infrastructure Play

Azure is the world's second largest cloud platform and Ackman views it the same way he views AWS inside his Amazon investment — as a direct beneficiary of the multi-decade migration of enterprise IT workloads to the cloud, now further accelerated by surging demand for AI inference. Azure grew 39% in constant currency last quarter, with management guiding to modest acceleration through the second half of the year. One of the more interesting elements of Ackman's thesis is his read on Microsoft's evolving relationship with OpenAI. Where many investors see the restructured partnership as a concession or a loss of strategic control, Ackman sees a deliberate pivot toward a more open, multi-model architecture. Microsoft has disclosed that over 10,000 enterprise customers have already used more than one model on Azure Foundry, the company's modular AI model marketplace. That model-agnostic approach strengthens Azure's position as the preferred enterprise AI infrastructure layer regardless of which foundation model ultimately wins. Microsoft has raised its 2026 capital expenditure budget to approximately $190 billion to support Azure's rapid growth. Importantly, Ackman notes that roughly two-thirds of that capex is allocated to server and networking equipment that correlates directly with near-term revenue generation — this is growth capex, not speculative spending.

The OpenAI Stake Nobody Is Pricing In

Perhaps the most overlooked element of Ackman's thesis is Microsoft's approximately 27% economic interest in OpenAI. At OpenAI's most recent funding round valuation, that stake is worth approximately $200 billion — representing roughly 7% of Microsoft's total market capitalization. At 21x forward earnings, the market is essentially giving you that OpenAI exposure for free. Whether you believe in OpenAI's long-term valuation or not, that is a meaningful asymmetric option embedded in the stock that the headline multiple does not reflect.

My Takeaway on Ackman's Buy

This fits perfectly within the pattern we have seen from Pershing Square over the past few years. Ackman is not chasing Microsoft — he has followed it for years and waited patiently for a valuation that made sense. Getting one of the finest enterprise technology franchises in the world at the market multiple, with Azure growing 39%, M365 growing 15%, and a $200 billion OpenAI stake embedded in the price, is a genuinely compelling setup. The concerns the market is focused on — AI competition for M365 and Azure's OpenAI dependency — are real questions worth monitoring, but Ackman's counterarguments are well reasoned and hard to dismiss. I personally found Microsoft extremely attractive sub $400 per share.

Microsoft (MSFT): Stock Analyzer

Microsoft is a high-margin, diversified enterprise technology platform with two dominant franchises in M365 and Azure plus a portfolio of other leading businesses in LinkedIn, gaming, and search. For this 10-YR analysis I used revenue growth rates of 8%, 11%, and 14%, reflecting the combination of M365 seat growth and pricing expansion, Azure's cloud and AI infrastructure momentum, and the continued build-out of Copilot and adjacent products. Net margins of 34%, 37%, and 40% reflect Microsoft's exceptional operating leverage as the business scales. A PE of 24 to 28 was applied at year ten given the qualit and durability of the franchise.

The fair value range comes out approximately as follows: the low scenario lands near $443, the middle near $650, and the high scenario near $940. At the price Ackman established his position — approximately 21 times forward earnings — Microsoft appears to be trading at a significant discount to fair value.

I would love to hear what the Everything Money community's stock analyzer results show for Microsoft. Run your own assumptions and tag me — let's see where you land and whether Ackman's entry price looks as compelling to you as it does to me.

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