Betting Big on Local AI: Microsoft’s Surface Refresh Meets a $190 Billion Infrastructure Pledge

Hedge fund manager Bill Ackman enters Microsoft with $2B position after stock's worst quarter since 2008, as Microsoft boosts AI capex to $190B and launches new Surface AI devices.

Bill Ackman’s Pershing Square has built a new position in Microsoft worth roughly $2 billion, stepping onto the buy side just as the Bill & Melinda Gates Foundation exited its remaining 7.7 million shares. The hedge fund manager pointed to a valuation around 21 times expected earnings and the growth runway from Azure and the OpenAI partnership. His entry came after Microsoft’s steepest quarterly stock decline since 2008, a period that also saw the software giant push harder into hardware.

On Wednesday, Microsoft unveiled a fresh lineup of Surface devices for business customers — a 13-inch Surface Pro and new Surface Laptop models — engineered to run artificial intelligence tasks locally. The machines rely on Intel’s Core Ultra Series 3 processors, which include dedicated neural processing units for on-device AI. Microsoft claims the Intel-based models deliver up to 35% more graphics performance than a MacBook Air with Apple’s M5 chip, and that the new Surface Laptop for Business is 90% faster than its predecessor, the Laptop 5. Later in 2026, Qualcomm-powered variants are expected to follow, further boosting local AI capabilities.

The hardware push is backed by eye-poching capital commitments. Microsoft now expects to spend roughly $190 billion in capital expenditures for the current fiscal year, up from an earlier forecast of $150 billion, with the bulk flowing into AI data centers. That spending is underpinned by a quarterly revenue of $82.89 billion, a 23% increase, and Azure’s 40% growth. Annualized AI revenue has reached $37 billion, giving the company a tangible return story for its investment narrative.

Ackman’s buy-in occurred after the stock’s worst quarter in over a decade, and the shares have remained under pressure in 2025. At midweek, Microsoft changed hands at around €358.80 in European trading, with a year-to-date loss of 11.1%. In the U.S., technical analysts are watching a zone between $405 and $425. The stock has recovered about 4% on a weekly basis, but remains shy of its longer-term trendline. Rising yields on 10-year U.S. Treasuries, which hit their highest level since early last year, continue to weigh on high-multiple technology names.

On the security front, Microsoft’s internal response team recently dismantled the criminal network "Fox Tempest," which had been helping ransomware gangs distribute malware. The company revoked more than 1,000 compromised certificates as part of the takedown.

Investors are now looking ahead to the Build 2026 developer conference in San Francisco, where Microsoft is expected to unveil new software agents capable of autonomously managing complex workflows. Some analysts have set price targets above $600, betting that the combination of on-device AI, cloud infrastructure, and autonomous software will keep the growth engine running. For now, the new Surface devices alone are unlikely to move the stock; the real test remains whether Azure can sustain its pace and whether the $190 billion in capex translates into visible revenue gains.