Bill Ackman built a $900 million stake in Microsoft during the first quarter, timing his entry as the AI trade sold off sharply in March. Pershing Square's 13F filing disclosed 2.8 million shares acquired between January and March, representing 1.8% of the fund's $50 billion portfolio. The move marks Ackman's first technology position above $500 million since his Netflix exit in 2022.
Microsoft traded between $385 and $447 during Q1, with the March correction driven by DeepSeek fears and tariff uncertainty. Ackman's average cost basis likely sits near $410, well below the current $465 level. The stake follows Pershing Square's typical concentration model: seven positions, each sized at $3-7 billion, held for 5-8 years. Microsoft joins Chipotle, Hilton, and Canadian Pacific as a core holding.
The position reflects conviction in Azure's accelerating growth trajectory. Microsoft reported 31% Azure revenue growth in Q1, with AI services now contributing 12 percentage points of that expansion. The company committed $80 billion to data center buildout in fiscal 2025, 40% more than Google and Amazon combined. Ackman's entry follows Nvidia's own Microsoft stake increase, disclosed two weeks prior at $1.2 billion. The AI infrastructure thesis now commands $14 billion in concentrated activist and tech-crossover capital.
Pershing Square's regulatory filing shows the Microsoft buy funded by trimming Chipotle (-8%) and exiting a small Restaurant Brands position. The rebalancing suggests Ackman views cloud infrastructure as the safer AI exposure relative to consumer discretionary. Worth noting: Microsoft trades at 32x forward earnings, a 15% discount to its five-year average, despite consensus expecting 14% EPS growth through 2027. The valuation gap reflects lingering skepticism over AI monetization timelines.
Allocators should track three developments. First, Microsoft's June earnings call will clarify Azure capacity constraints and enterprise AI adoption rates. Second, Pershing Square's upcoming investor letter, expected mid-May, will detail Ackman's AI infrastructure thesis and position sizing rationale. Third, Elliott Management's $4 billion PepsiCo stake, disclosed today, signals activist capital rotating from tech back into operational turnarounds. That flow matters for concentration risk across the Magnificent Seven.
Ackman now holds $6.2 billion in combined tech exposure—Microsoft plus a smaller Google position acquired in 2024. The allocation sits at 12% of fund assets, double his historical technology weighting. His last comparable bet was Starbucks in 2023, sized at $900 million and exited nine months later at breakeven. The Microsoft position carries more structural conviction: cloud revenue visibility, margin expansion, and a $3 trillion buyback authorization running through 2028.