Key Takeaways:
- Microsoft is now Pershing's biggest AI stock holding at $2.3 billion
- Microsoft's quarterly revenue rose 18 percent to $90 billion
- Azure surpassed $100 billion in full fiscal year revenue
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Pershing Square makes Microsoft top AI holding at $2.3B, exits Alphabet
Pershing Square made Microsoft its largest AI holding at $2.3 billion, selling Alphabet and trimming Amazon 25 percent.
"With direct involvement from CEO Satya Nadella, the company has redoubled Copilot product innovation and growing adoption should further entrench M365 as agentic work scales," Pershing's June interim report said. "In our view, Azure, the second largest public cloud hyperscaler, is well positioned in a supply constrained compute market, and its capital expenditures are prudent investments to accelerate growth."
The $2.3 billion position comprises 6.2 million Microsoft shares, representing 11.9 percent of Pershing's 14-stock portfolio. In Q2, Ackman trimmed Amazon by 2.9 million shares (25 percent), sold his entire Alphabet stake, and added 553,000 Microsoft shares. Pershing has historically maintained concentrated positions in large-cap technology names, with Alphabet, Amazon, Meta Platforms, and Microsoft all holding prominent weightings at various points. The Q2 rebalancing marks a decisive shift toward Microsoft as the fund's primary AI exposure.
Microsoft's fiscal Q4 revenue rose 18 percent year over year to $90 billion, with net income up 31 percent to $35.76 billion. Full fiscal year Azure revenue surpassed $100 billion. The company generated $19.6 billion in free cash flow and projects remaining FCF-positive in fiscal 2027 — a contrast with Alphabet's negative FCF of $5.9 billion and Amazon's negative FCF of $7.6 billion in their most recent quarters. The FCF divergence is a key differentiator as AI infrastructure spending strains balance sheets across the sector. Microsoft's ability to fund massive AI capital expenditures while maintaining positive free cash flow gives it a structural advantage over peers that must borrow or dilute to finance their AI buildouts.
Microsoft shares have gained 25 percent since the company's late-July earnings report. The stock trades at $491.71, giving it a market cap of $3.7 trillion. The company's gross margin stands at 67.94 percent, with a dividend yield of 0.74 percent. The stock's 52-week range spans $349.20 to $553.72.
The portfolio shift shows Ackman's conviction that Microsoft's established productivity suite and Azure growth offer a more durable AI monetization path than Alphabet's capital-intensive cloud and search investments. Pershing's thesis rests on the idea that Microsoft's M365 suite — including Word, Excel, and PowerPoint — combined with Azure's position as the second-largest public cloud hyperscaler, creates a compounding revenue base that can fund continued AI investment without sacrificing profitability. The fund's decision to exit Alphabet entirely while doubling down on Microsoft reflects a bet that enterprise software adoption of AI tools will generate more reliable returns than search-based AI monetization. Investors will watch Microsoft's next earnings call for updated Copilot adoption metrics and Azure growth guidance.
This article is for informational purposes only and does not constitute investment advice.
[1] Bill Ackman's Pershing Square Made Microsoft Its Largest AI Holding by Selling Alphabet. Here's the Thesis Behind the Switch.[2] Bill Ackman's Pershing Square Made Microsoft Its Largest AI Holding by Selling Alphabet. Here's the Thesis Behind the Switch. - The Globe and Mail[3] Bill Ackman's Pershing Square made Microsoft its largest AI holding by selling Alphabet. Here's the thesis behind the switch.
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