Hedge Funds Flee Microsoft as AI Fears Mount

TCI Fund Management, a British hedge fund managed by billionaire Christopher Hohn, has drastically reduced its stake in Microsoft from 10% to just 1%. This move is estimated to be worth around $8 billion. The decision comes as TCI expresses concerns that the rapid evolution of artificial intelligence (AI) could undermine Microsoft's dominance in software.

Hohn, known for holding stocks for an average of nine years, stated in a quarterly investor letter that 'the rapid progress in AI introduces uncertainty over Microsoft's competitive position in the future.' He specifically mentioned Microsoft's Office productivity software franchise and Azure as areas where he sees risks due to the potential impact of AI.

This is not the only hedge fund to reduce its exposure to Microsoft. Duquesne Family Office and Tiger Global have also cut their stakes, citing similar concerns about AI disruption. Microsoft has been a long-term holding for TCI, with a nearly 400% rise in share price over the past nine years.