Microsoft (MSFT) stock pushed higher on Friday after billionaire Bill Ackman disclosed his hedge fund, Pershing Square Capital Management, has built a new position in the tech titan.
Ackman dubbed MSFT’s current valuation as “highly compelling” and designated the stock a core holding in both his flagship hedge fund and his newly launched closed-end fund, Pershing Square USA.
At the time of writing, Microsoft stock is up roughly 18% versus its year-to-date low.
Ackman Says Microsoft Stock Is Attractively Priced
Pershing Square started accumulating MSFT shares in February, following a meaningful decline after the giant’s Q2 results that disappointed investors with slower cloud growth and rising capex.
Ackman was able to establish his position at about 21x forward earnings, broadly in line with the market multiple and well below Microsoft’s historical trading average.
Despite recent gains, MSFT remains down some 14% versus its year-to-date high, which Ackman said is a major disconnect between price and fundamental value.
Ackman’s disclosure is constructive for Microsoft, given it may prompt other institutional investors to revisit the stock as well.
Note that MSFT currently pays a dividend yield of 0.86% as well.
Ackman Counters Concerns That Have Hurt MSFT Shares
In his disclosure, Ackman also dismissed two major investor concerns that have driven the stock’s decline:
- Competition from AI labs like Anthropic’s Claude Cowork threatening M365
- Uncertainty around Azure’s durability following MSFT’s restructured OpenAI partnership
According to him, M365’s bundle economics, with average revenue per user of roughly $20 (less than half the cost of purchasing individual applications separately, create significant barriers to displacement.
He also framed the OpenAI restructuring as a deliberate pivot toward a multi-model architecture rather than a concession.
From a technical perspective, Microsoft shares sit firmly above their key moving averages (MAs), with an RSI in the late 50s indicating intense buying pressure.
How Wall Street Recommends Playing Microsoft
Wall Street analysts also remain bullish as ever on Microsoft for the next 12 months.
The consensus rating on MSFT stock sits at “Strong Buy,” with the mean price target of about $554 indicating potential upside of more than 30% from here.
This article was created with the support of automated content tools from our partners at Sigma.AI. Together, our financial data and AI solutions help us to deliver more informed market headline analysis to readers faster than ever.
On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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