Billionaires Bill Ackman, Jeremy Grantham, and Cliff Asness Are Piling Into This AI Stock the Market Is Severely Undervaluing

Billionaire investors (Pershing Square, GMO, and AQR) increased positions in Microsoft, including Pershing Square adding about $2B and AQR lifting its stake by 60%, as the stock trades at its lowest level since early 2024. The article cites strong fundamental momentum: Azure revenue grew 40% y/y last quarter with management expecting acceleration in H2 and a $627B contracted revenue backlog (about 25% to be recognized over 12 months). Enterprise software revenue rose 17% y/y, supported by Copilot adoption (20M paid commercial users) and pricing, with Microsoft valued at ~21x earnings as “severely undervalued,” implying a constructive medium-term outlook.

Analysis

This is less a classic value setup than a quality-duration trade: if MSFT can convert AI infrastructure spend into durable software monetization, the earnings stream deserves a premium multiple even in a higher-rate regime. The market’s mispricing risk is that it is still valuing the company as if cloud growth normalizes quickly, while the installed base and pricing power keep extending the runway. The real question is whether Copilot and Azure are accretive enough to offset the heavier AI capex cycle; if not, the current multiple can stay pinned despite strong headline growth.

Relative winners are MSFT’s ecosystem partners and holders of the stock through vehicles like PSHZF/PSUS, which may get a short-lived sentiment lift from allocator imitation, but the fundamental upside is concentrated in MSFT itself. Relative losers are the pure-model AI beneficiaries if software captures more of the value chain than chips: that argues for a tighter read-through to NVDA multiple risk than the article implies. A re-rating of MSFT would likely come at the expense of lower-quality enterprise software names that lack either distribution or balance-sheet capacity to bundle AI into existing workflows.

The contrarian risk is that the crowd is calling this a cheap mega-cap when it may just be a temporarily cheaper mega-cap with the same margin ceiling concerns as other hyperscalers. Near term, article-driven support can help the stock for days, but the 1-3 month catalyst is earnings guidance on cloud acceleration and paid Copilot attach; if those disappoint, the base breaks. Over 6-18 months, the thesis dies if Azure growth slows materially or if AI monetization remains a cost story instead of a revenue story.

Key Decisions for Investors

• Long MSFT on weakness, 3-6 month horizon; use the current selloff as entry only if it holds relative strength versus QQQ. Target a 10-15% rerating if Azure/Copilot commentary confirms monetization; invalidate on a sustained break below the recent 2024 lows or any guidance that implies growth deceleration.
• Pair trade: long MSFT / short NVDA into the next earnings cycle if you want AI monetization over AI infrastructure. Thesis is that software capture can expand while chip margins are already priced for perfection; cover the short if NVDA re-accelerates bookings or raises guide above the market’s highest whisper number.
• Buy a defined-risk MSFT call spread 3-6 months out rather than outright stock if you want exposure to a sentiment-driven rerating with capped downside. This is preferable if implied volatility is still elevated from the AI/mega-cap complex.
• Watch PSHZF and PSUS as sentiment proxies, not core expressions of the idea. If flows/AUM materially reprice higher after the filing-driven attention, that is a secondary confirmation, but do not confuse follower buying with durable fundamental support.