Ackman ditches Alphabet for Microsoft down 20%

The trade is a clean illustration of how hedge funds are repositioning around AI-driven stock swings. Ackman exited Alphabet after what the article describes as likely multibagger returns, and rotated into Microsoft, which had lagged in the first half of 2026. Two themes weighed on Microsoft then: fears that AI would disrupt enterprise software, and its perceived reliance on OpenAI for Azure growth. Neither has shown up in the numbers so far — commercial 365 revenue rose 14% year over year in constant currency, and Microsoft has since diversified its AI cloud business beyond OpenAI.

The valuation gap gave Pershing Square its opening. Microsoft's forward P/E was in the low 20s while Alphabet's was in the low 30s, and Apple's in the high 30s. On the strength of cloud revenue and a large backlog, the stock has recovered and is now down just 5% from its 2025 highs. But Alphabet's Google Cloud is growing far faster, and the open question is whether AI agents eventually erode Google Search. That concern has not yet appeared in Alphabet's results.

So the verdict is split by horizon. Short term, the numbers favor Ackman's switch. Long term, it hinges on whether Alphabet's faster cloud growth and resilient Search revenue close the performance gap, or whether Microsoft's cheaper starting point and rebound prove the better bet. The article's own read is that both should do fine for patient investors comfortable with the AI risks on each side.