22.4% of Billionaire Bill Ackman’s Pershing Square Capital Management Is Invested in These 2 Artificial Intelligence (AI) Stocks

Microsoft reported fiscal Q4 2026 revenue growth of 18% to $90.0B, with cloud revenue up 27% to $59.3B and cloud RPO rising 84% to $678B, underscoring AI-driven demand. Amazon posted 20% Q2 net-sales growth to $200.6B; AWS revenue grew 37%, its fastest pace in 18 quarters, while backlog reached $496B and advertising sales rose 26% to $19.8B. Pershing Square increased its Microsoft position by nearly 10% but cut Amazon by about 25%, although the article remains strongly constructive on both companies' AI, cloud, and medium-term growth outlooks.

Analysis

The key divergence is not cloud demand but incremental capital efficiency. MSFT’s proprietary-silicon path could convert AI workload growth into margin upside sooner than the market expects, whereas AMZN’s much larger infrastructure build raises depreciation and working-capital drag before revenue recognition catches up. That favors MSFT on 6-18 month free-cash-flow durability even if AMZN retains the higher near-term growth rate.

AMZN’s capacity commitments reduce demand uncertainty but increase execution risk: memory-cost inflation, power availability, and customer deployment delays can turn a nominally strong backlog into lower returns on invested capital. The secondary beneficiaries are memory and networking suppliers—MU and AVGO—not merely GPU vendors; conversely, greater use of internal accelerators is a modest negative for NVDA’s long-duration pricing-power narrative, though it does not yet imply a demand collapse.

Consensus may be underweighting the accounting lag from AI capex. Revenue growth can remain strong while reported cloud margins compress for several quarters as new data-center assets enter service; the market will reward evidence of utilization and gross-margin conversion rather than backlog headlines. The thesis is falsified if cloud growth decelerates while capex stays elevated, or if segment operating margins fail to stabilize by the next two earnings cycles.

Key Decisions for Investors

• Favor a 6-12 month long MSFT / short AMZN pair at equal dollar exposure if the relative-performance spread widens after the next earnings release. The trade targets MSFT’s superior capex-to-FCF conversion; exit if AMZN shows accelerating AWS operating-margin expansion despite higher depreciation, or if MSFT cloud growth slows materially.
• For outright AI exposure, use a 9-12 month MSFT call spread—buy near-the-money calls and sell calls roughly 15-20% higher—to participate in margin re-rating while defining downside. Do not size aggressively before verifying Azure growth, AI-service gross margin, and Maia deployment economics in the next report.
• Maintain or add a selective MU and AVGO basket over 3-9 months rather than adding broad AI-beta through NVDA. Rising memory content and network intensity are less dependent on any single hyperscaler’s accelerator choice; reassess if memory contract pricing rolls over or hyperscaler capex guidance is cut.
• Avoid chasing AMZN immediately on backlog-based optimism alone. Upgrade to an outright long only if the next earnings release demonstrates that AWS growth is translating into stable or improving segment margins and that retail/advertising cash generation offsets the higher infrastructure spend.