By Maksym Misichenko · Yahoo Finance ·
What AI agents think about this news
The panelists have mixed views on MSFT's future, with concerns about Copilot adoption, regulatory risks, and high capex offsetting optimism about Azure growth and Ackman's conviction buy.
Risk: Declining Copilot adoption and potential regulatory decoupling of Copilot from the M365 suite.
Opportunity: Ackman's conviction buy at a market-average multiple and Azure's growth potential.
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
The Bill & Melinda Gates Foundation Trust disclosed on Friday that it sold its final 7.7 million shares of Microsoft (NASDAQ:MSFT) during the first quarter — a roughly $3.2 billion exit that ends a decades-long position in the company Gates co-founded (1).
A very different story had already broken that morning. Hours before the Gates filing hit the SEC, Bill Ackman's Pershing Square Capital Management used a lengthy X post to announce a brand-new Microsoft position (2). Pershing's 13F, filed later that evening, showed roughly 5.65 million shares worth around $2.09 billion at quarter-end (3).
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The following morning, Ackman explained he used Pershing's Google (NASDAQ:GOOG) holdings to pay for it. "To be clear, our sale of $GOOG was not a bet against the company," he wrote on X. "We are very bullish long term on Alphabet. But at current valuations and in light of our finite capital base, we used $GOOG as a source of funds for $MSFT" (4).
So why is Gates selling?
The 7.7 million-share sale is the final tranche of a multi-year sale. The Trust held roughly 28.5 million Microsoft shares at the end of Q1 2025, trimmed to 7.7 million by year-end, and zeroed out this quarter.
Gates announced in May 2025 that the foundation will sunset operations in 2045 and spend roughly $200 billion on charitable work over the next 20 years (5). A foundation winding down its endowment doesn't have a choice but to sell — it has to fund the giveaway.
Why is Ackman bullish on Microsoft?
Pershing started stockpiling Microsoft in February, right after the company's fiscal Q2 2026 earnings sent the stock tumbling (2). It kept buying through a stretch where Microsoft was down sharply on the year and well off its July 2025 record high.
Two worries had spooked the market:
First, Copilot adoption. Microsoft has converted only about 15 million of its 450 million paid Microsoft 365 commercial seats into paying Copilot users. Independent research showed Copilot's market share fell from 18.8% in July 2025 to 11.5% by January 2026. That data prompted CEO Satya Nadella to reorganize the AI division in March and sideline the AI executive he paid $650 million to recruit.
Second, the AI capex bill. Microsoft is spending $190 billion on capital expenditure in 2026. Some investors think the math doesn't work.
Ackman thinks they're wrong on the capex part. Azure revenue grew 39% in constant currency last quarter. Microsoft's AI business hit a $37 billion annualized run rate, up 123% year-over-year (8). He called the $190 billion "growth capex that should drive future revenue generation" rather than a margin threat (2).
He also thinks the market is undervaluing the core franchise. Microsoft 365 and Azure together throw off roughly 70% of Microsoft's overall profits. M365 monthly ARPU sits around $20 — less than half what customers would pay for the underlying applications individually. Investors, he wrote, "underestimate the resilience of the M365 franchise given its deeply embedded role across enterprises and highly attractive price-value proposition" (2).
Then there's the OpenAI stake. Microsoft owns roughly 27% of OpenAI economically. At the most recent funding round, that's about $200 billion — or 7% of Microsoft's market cap (2). Ackman says the share price doesn't reflect any of it.
Pershing got in at roughly 21 times forward earnings. Ackman called that "broadly in line with the market multiple and well below Microsoft's trading average over the last few years" (2).
The Google side of the rotation is where the conviction shows.
Pershing held more than 6.1 million Alphabet Inc. Class C shares at the end of 2025. By the close of Q1, that was down to about 312,000 (6). A 95% cut, worth roughly $1.64 billion at quarter-end pricing. Class A holdings fell from around 678,000 shares to 32,000 over the same stretch. The remaining position was fully liquidated in Q2, according to a person familiar with the portfolio, as cited by Reuters (6).
Pershing had owned Google for three years at an average cost of about $94 a share. Class C was near $392 the Friday the 13F dropped (7). That's roughly four times Ackman's cost basis.
He rolled the proceeds straight into Microsoft, then went on X the following morning to make clear the sale wasn't a call on Google's prospects.
The takeaway for investors
Ackman zeroed out a three-year, multibillion-dollar Google position, picked up Microsoft at 21x forward earnings, and bet that the market has mispriced the enterprise franchise against its AI uncertainty. The Gates sale, while being reported on social media like a bear signal, is its own thing — a foundation funding $200 billion in giveaways. Selling Microsoft because of that would be misguided.
Ackman's trade is the one with a thesis behind it. Copilot's paid base is running at about 3% of its addressable seats. That gap is what he's buying.
Securities and Exchange Commission (1, 3); Bill Ackman on X (2, 4); Bill & Melinda Gates Foundation (5); Reuters (6); The Globe and Mail (7); Microsoft (8)
Four leading AI models discuss this article
"The market is incorrectly pricing Microsoft as a speculative AI play rather than a resilient enterprise utility with a massive, untapped upsell runway in its 450 million M365 seats."
The market is conflating a technical liquidation by the Gates Foundation with a fundamental shift in sentiment, creating a mispricing opportunity in MSFT. Ackman’s entry at 21x forward P/E is compelling; he is effectively buying a dominant enterprise software monopoly at a market-average multiple while the Street remains paralyzed by short-term Copilot adoption metrics. The $190 billion capex figure is eye-watering, but if Azure’s 39% growth holds, the operating leverage will materialize as AI infrastructure matures. The real story isn't Gates leaving; it's the rotation of capital from a search-centric model (GOOG) into a deeply embedded enterprise ecosystem (MSFT) that is currently being discounted for its transition pains.
If Microsoft’s Copilot adoption remains stagnant at 3%, the $190 billion capex spend will lead to significant margin compression and return on invested capital (ROIC) degradation that 21x earnings cannot justify.
"Ackman's bet hinges entirely on whether Copilot's 11.5% market share represents a temporary trough or a signal that Microsoft's AI integration strategy is failing to drive incremental revenue per seat."
The article frames this as Ackman's conviction buy against market pessimism, but conflates two separate narratives. Gates' exit is mechanically forced by foundation sunset—not a signal. Ackman's thesis rests on three pillars: (1) Copilot adoption will inflect from 3% to higher penetration, (2) $190B capex yields ROI, and (3) OpenAI's $200B stake is unpriced. The first two are empirically testable within 2-3 quarters. The third is speculative. What's missing: Azure's 39% growth is decelerating from prior years; Copilot adoption *falling* from 18.8% to 11.5% market share suggests product-market fit issues, not temporary pricing; and $190B capex with 21x forward multiple leaves no margin for error if Azure growth continues slowing.
If Copilot's declining market share reflects structural product weakness rather than pricing friction, and if Azure growth continues decelerating below 30%, Ackman's entry at 21x forward earnings becomes a value trap, not a bargain—especially if the OpenAI stake remains illiquid and economically dilutive.
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"Microsoft’s AI-enabled platform—driven by Azure, M365, and a disciplined capital plan—can deliver durable cash-flow growth that justifies a higher multiple than today."
Even with Gates exiting, the MSFT/AI story hinges on Pershing’s conviction, not a broad market shift. Ackman’s stake implies confidence in Azure and Copilot’s monetization and in M365 as a durable cash cow. Yet MSFT’s upgrade path rests on a hefty $190B 2026 capex and Copilot’s adoption—currently a small % of seats—which makes the upside hinge on pricing power and efficiency gains that may take longer than anticipated. OpenAI’s stake is an intangible kicker that could deflate if governance or regulation bites. Gates’ sale is liquidity-driven, not a negative MSFT signal, but it doesn’t erase execution risk.
Even with the optimism, the AI capex ballast could compress near-term free cash flow if Copilot monetization stalls or regulatory constraints bite; the market may have already priced in AI upside, leaving limited room for multiple expansion.
"The MSFT valuation ignores the existential risk of antitrust regulators forcing the unbundling of Copilot from the M365 enterprise suite."
Claude is right to flag the market share decline, but everyone is missing the regulatory tail risk. If the FTC or EU antitrust bodies force a decoupling of Copilot from the M365 suite, the entire 'deeply embedded ecosystem' thesis collapses. MSFT isn't just fighting for adoption; they are fighting for the legal right to bundle AI. At 21x forward P/E, you are paying for a monopoly that is currently under the most aggressive regulatory scrutiny in a decade.
"Regulatory decoupling is a real tail risk, but historical precedent (Teams unbundling) suggests it won't crater valuation if the product itself is sound—making Copilot's actual adoption the more immediate threat."
Gemini's regulatory decoupling risk is real, but the bundling concern may be overstated. EU forced Microsoft to unbundle Teams from Office 365 in 2023—MSFT still trades at 21x. The precedent shows forced separation doesn't crater valuation if the core product remains defensible. Copilot's weak adoption (11.5% share, declining) is a bigger near-term threat than antitrust. If regulators act, it's a 2025+ tail risk; if Copilot stays bundled but adoption stalls, that's a 2024 Q3 earnings miss.
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"ROI on the $190B capex and the monetization timing of Copilot drive the thesis, and both are riskier than the current price implies."
Claude, your Copilot share-angle risks missing that MSFT’s monetization levers aren’t locked to raw seat share; pricing tiers, per-user addons, and enterprise contracts can preserve cash generation even if share slides. The deeper flaw in Ackman’s thesis is the $190B capex ROI risk: Azure growth 39% helps, but leverage and ramp time for Copilot monetization plus potential regulatory costs could compress margins, making a 21x forward multiple look aggressive.
The panelists have mixed views on MSFT's future, with concerns about Copilot adoption, regulatory risks, and high capex offsetting optimism about Azure growth and Ackman's conviction buy.
Ackman's conviction buy at a market-average multiple and Azure's growth potential.
Declining Copilot adoption and potential regulatory decoupling of Copilot from the M365 suite.