Pershing Square Backs Microsoft Over Alphabet with $2.3 Billion Bet

Pershing Square Capital Management has made Microsoft its largest AI holding after selling its entire stake in Alphabet. This move comes as Microsoft's quarterly revenue rose 18% from a year ago to $90 billion, with net income up 31% to $35.76 billion.

The company has also surpassed $100 billion in Azure revenue over the past year and generated $19.6 billion in free cash flow (FCF) in its latest quarter. In contrast, Alphabet had negative FCF of $5.9 billion in its most recent quarter, while Amazon had negative FCF of $7.6 billion.

Pershing Square CEO Bill Ackman attributed the switch to Microsoft's strong growth and increasing demand for Azure. He noted that the company has redoubled Copilot product innovation under CEO Satya Nadella and is well-positioned in a supply-constrained compute market.