Bill Ackman Bets Big on Microsoft as the Tech Giant Reshapes Its AI Playbook

Bill Ackman's Pershing Square invests in Microsoft, citing attractive valuation. Microsoft renegotiates OpenAI deal, caps revenue, and pursues AI startup Inception for homegrown models.

Bill Ackman’s Pershing Square has built a core position in Microsoft, a vote of confidence that arrived just as the stock had been trailing its mega-cap peers. Shares jumped 3.49% on Friday to €363.20, a stark contrast with the broader tech index, which slid 1% that same day. The move is more than a short-term boost: Ackman cited a “highly attractive valuation” after the recent selloff, pointing to the resilience of the Microsoft 365 franchise and the growth potential of Azure. Year to date, the stock still sits roughly 10% lower, and it remains well below its 52-week high of €467, but the Ackman endorsement adds a fresh catalyst.

The timing is telling. Microsoft is simultaneously executing a two-pronged strategy to cement its lead in artificial intelligence while reducing its heavy dependence on OpenAI. The hedge fund’s entry dovetails with a market rotation into large-cap tech, and the stock’s forward price-to-earnings multiple of roughly 21 times offers a discount relative to several other mega-cap names.

A Renegotiated OpenAI Pact Cuts Both Ways

Microsoft has fundamentally overhauled its commercial agreement with OpenAI, capping its revenue-sharing obligation at $38 billion through 2030. Under the new terms, Microsoft will receive 20% of OpenAI’s revenue, with an estimated $6 billion flowing in for the current fiscal year alone—up from roughly $4 billion previously. The deal also locks in rights to use OpenAI’s models through 2032, regardless of when or if the startup achieves artificial general intelligence.

More critically, Microsoft has removed the previous requirement to share revenue from Azure sales of OpenAI models with its partner. Wedbush analyst Daniel Ives called this a meaningful removal of what had been “a noticeable brake on Azure’s AI monetisation.” The move frees Microsoft to capture the full upside from enterprises deploying OpenAI’s technology on its cloud platform.

Hunting for Homegrown AI Talent

While the OpenAI relationship remains central, Microsoft is aggressively reducing its reliance on outside models. The company is in advanced talks to acquire Inception, a Palo Alto startup that builds diffusion-based language models — a fundamentally different architecture from the autoregressive models used by most large language models. Inception, a Stanford spinout, has hired a banker and is seeking a price above $1 billion. Microsoft’s venture arm M12 had already participated in a $50 million seed round for Inception in late 2025.

The acquisition hunt hasn’t been without setbacks. Microsoft passed on buying the code assistant Cursor out of antitrust concerns, given that it already owns GitHub Copilot. SpaceX swooped in to strike a deal with Cursor after Microsoft stepped back. Meanwhile, the broader competition for AI talent remains fierce: SpaceX also reportedly expressed interest in Inception.

Microsoft’s own AI division under Mustafa Suleyman has already delivered first-party models this year, including MAI-Transcribe-1 and MAI-Voice-1. The company aims to produce a competitive frontier model from its own team by the end of 2026.

Regulatory Clouds Over the Software Bundle

But even as Microsoft accelerates its AI ambitions, a new antitrust probe in the United Kingdom threatens its most lucrative bundling strategy. On 14 May 2026, the UK’s Competition and Markets Authority opened an investigation into Microsoft’s office software business. The CMA will examine whether packages combining Windows, Office, Teams and Copilot create technical barriers that disadvantage rivals. This marks the fourth case under the UK’s expanded competition powers, and it targets a business model at the very heart of Microsoft’s profitability: tightly integrated product ecosystems.

Strong Numbers Under the Hood

Despite the regulatory headwinds and the stock’s year-to-date decline, Microsoft’s operational performance remains robust. In its third fiscal quarter of 2026, revenue climbed 18% to $82.89 billion. Azure and other cloud services grew 40%, while the annualised AI revenue run rate hit $37 billion — a 123% surge from the prior year. Earnings per share came in at $4.27, topping the consensus estimate of $4.07. The commercial backlog stood at $627 billion, a figure that Wedbush highlighted as evidence of sustained enterprise demand.

These fundamentals help explain why Ackman and analysts alike are looking past the recent stock weakness. Citi holds one of the highest price targets on the Street at $620, while Wedbush maintains its outperform rating with a $575 target.

The Cost of the AI Race

Microsoft’s commitment to AI is expensive. The company has pencilled in $190 billion in capital expenditure for fiscal 2026, the bulk of it going toward GPU and CPU infrastructure that depreciates rapidly. Quarterly capex runs at $31.9 billion, with roughly two-thirds allocated to hardware. The spending has raised questions about returns, but the rapid growth in AI revenue and the expanding backlog suggest that demand is absorbing supply.

On the hardware front, Microsoft recently hosted WinHEC 2026 in Taipei — its first such hardware conference since 2018 — where it launched the Driver Quality Initiative aimed at making drivers more stable and secure, deepening collaboration with chip makers and PC partners.

Short term, the stock sits above its 50-day moving average but below the 200-day line, reflecting a market that is still weighing Ackman’s bullish signal against the pending UK probe and the staggering infrastructure tab. Whether the Azure and AI momentum can sustain the valuation depends on the next quarterly numbers, but the combination of a high-profile activist entry and a strategic push for AI independence gives Microsoft a rare moment of both internal and external reinforcement.