Two Billion-Dollar Bets Collide at Microsoft: A Foundation's Exit and a Hedge Fund's AI Wager

The shareholder register of Microsoft is undergoing a striking transformation. On one side, the Bill & Melinda Gates Foundation has liquidated its entire direct stake in the software giant after 25 years, while on the other, investor Bill Ackman has built a new multi-billion-dollar position betting on the company's cloud and artificial intelligence prowess. The divergence underscores a market that is still trying to price in the full implications of Microsoft's AI push.

The Gates Foundation trust sold its remaining 7.7 million Microsoft shares during the first quarter of 2026, fetching approximately $3.2 billion. The move, executed gradually over two years, is part of a strategic plan to boost liquidity for annual grant spending that now approaches $9 billion. The foundation's endowment is scheduled to be fully deployed by 2045. Importantly, Bill Gates himself still holds roughly 103 million Microsoft shares personally, according to media reports, signaling no personal loss of faith in the company.

Ackman, meanwhile, began accumulating shares in February after the stock slipped on earnings. His Pershing Square hedge fund now holds 5.6 million Microsoft shares worth around $2.3 billion. In explaining the bet, Ackman pointed to what he sees as an excessive discount in the valuation. The forward price-to-earnings multiple, he argues, sits well below its historical average. He also highlighted a hidden asset: Microsoft's 27% stake in OpenAI, which Ackman values at roughly $200 billion — a sum that the current market cap does not reflect. For Ackman, market fears over Microsoft's competitive position in AI are overblown, given the deep corporate entrenchment of its Office software.

Should investors sell immediately? Or is it worth buying Microsoft?

On the operational front, Microsoft's financials offer strong support for that bullish thesis. Third-quarter fiscal 2026 revenue rose 15% to nearly $83 billion, with Azure growing 40% on a constant-currency basis. The AI business alone has reached an annualized revenue run rate of $37 billion, more than doubling year over year. A massive contract backlog of $627 billion provides long-term visibility. The company's Copilot assistant now counts over 20 million paying users.

Yet the stock has not followed the earnings trajectory. Shares currently trade at around €363.30 in Europe, down roughly 10% year-to-date, well off their 52-week high above €467 and below the 200-day moving average of €396. The pressure stems from heavy capital expenditure: Microsoft plans nearly $190 billion in infrastructure spending this year to meet AI demand, and that has squeezed free cash flow margins to 19.1% — a significant drop from a year earlier.

Looking ahead, investors have several catalysts to watch. The company is reportedly negotiating to acquire AI startup Inception for more than $1 billion as it seeks to develop independent large language models beyond its partnership with OpenAI. New AI-related infrastructure coming online in the second half of 2026 should further accelerate Azure growth. At 24 times forward earnings, Microsoft now trades cheaper than peers Alphabet and Amazon. For income-focused shareholders, the quarterly dividend of $0.91 per share goes ex-dividend on May 21.

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