Pershing Square Capital Management disclosed a new $1.2 billion position in Microsoft through its Q1 13F filing Friday, marking Bill Ackman's first direct equity stake in the software company. The fund accumulated shares in February while the stock traded between $380 and $400, down 15% from January highs. The timing suggests Ackman viewed enterprise AI concerns as overdone.
The filing shows a complete exit from Hilton Worldwide, a position Pershing Square first established in 2018 at roughly $9 billion in market value and exited near $17 billion. The fund also reduced its Alphabet stake by an undisclosed percentage, though the Class A position remains among Pershing Square's top five holdings. The Microsoft purchase represents the fund's first new public equity position since it entered Canadian Pacific Kansas City in 2022.
Ackman's Microsoft entry follows three quarters of consolidation around cloud revenue growth rates and OpenAI exclusivity questions. The stock now trades at 22x forward earnings, below its three-year average of 28x, despite Azure posting 31% constant-currency growth in the March quarter. Pershing Square's concentrated portfolio structure—typically eight to twelve names—means the Microsoft position likely represents 8-12% of assets, or roughly 3 million shares at cost basis. The Hilton exit completes a lodging thesis that returned approximately 88% over six years, driven by franchise-fee margin expansion and accelerated unit growth. That capital now sits in a lower-multiple software infrastructure play with embedded AI optionality.
The Alphabet trim is the more revealing move. Pershing Square has held the position since 2023, but the reduction suggests concern over Search's pricing power as AI answer engines fragment query economics. Microsoft's positioning as the integration layer—Windows, Office, GitHub Copilot, all monetized separately from Azure—offers more explicit revenue lines than Alphabet's bundled Gemini approach. Ackman is trading distribution certainty for search-ad exposure.
Watch for Pershing Square's Q2 commentary around Microsoft's June Inspire partner conference and any further Alphabet trimming through July. If the fund adds to Microsoft below $400 in the current quarter, it signals conviction that enterprise AI capex cycles extend through 2026. Hilton's next earnings call on May 7 will clarify whether Ackman exited ahead of RevPAR deceleration or simply rebalanced into cheaper growth. The Canadian Pacific position, unchanged this quarter, remains the fund's second-largest holding.
Ackman now owns the productivity layer betting clients pay per-seat regardless of model performance. The Hilton cash funds six quarters of Microsoft accumulation if volatility persists.