Do you own Microsoft? Discover the opposing views of two managers

It is not unusual for fund managers to have different views on stocks, but when two high profile managers make opposing bets, it certainly grabs the attention.

Regulatory filings show TCI (The Children’s Fund) founder Chris Hohn sold virtually all its $8 billion stake in US software giant Microsoft and subsequently increased its stake in Alphabet to make it the fund’s largest technology holding.

Meanwhile, Pershing Square’s Bill Ackman recently announced a new $2.8 billion position in Microsoft, which was part funded by a sale of Alphabet. The investment has become a core holding for Pershing Square USA, the firm’s newly launched closed-end fund.

How have Microsoft shares performed?

The shares have lost around 10% of their value over the last year, significantly underperforming the S&P 500 which is up by nearly a fifth. This reflects market concerns over AI’s intrusion into the software industry after Anthropic launched a suit of specialist AI tools in late February 2026.

The recent share price weakness means that Microsoft has given back all the excess gains over the S&P 500 since the dawn of AI in November 2022, when OpenAI launched ChatGPT.

The shares are still up more than 70% since 2022, but the point is, they have slightly underperformed the broad S&P 500 index over a period when AI-related stocks have been surging.

In a letter to shareholders Hohn points out that Microsoft shares have risen nearly 400% during TCI’s nearly decade-long ownership, which means there were big gains to lock in.

Was it just profit taking or something else?

While Hohn is certainly not saying Microsoft has suddenly become a bad business, he feels its ‘moat’ is far less predictable over the next decade as AI threatens to commoditise software faster than Microsoft can defend its dominance.

For context, Hohn’s investing style is focused on companies with very strong, durable moats. He defines a durable moat as a virtually unassailable competitive advantage characterised by multiple barriers to entry, low substitution risk, and the ability to raise prices above inflation.

Hohn believes AI could reduce the importance of traditional office apps like Word, Excel and PowerPoint while also threatening Microsoft’s Azure cloud business.

Why does Ackman see Microsoft as a core holding?

Ackman believes investors are overreacting to concerns around huge AI spending and underestimating how durable Microsoft’s moat is, giving him a rare opportunity to buy a dominant franchise at what he regarded as a good price.

Ackman stated: “We are pleased to see Microsoft shifting R&D resources toward AI, especially the Copilot AI assistant embedded in M365, with CEO Satya Nadella personally driving its implementation.

“Over time, these investments will translate into faster product iteration speeds and higher customer penetration.”

He argues that Microsoft’s franchise in enterprise technology will be enhanced by AI as the company evolves from selling ‘per seat’ software licenses to charging for AI-driven usage and agents layered on top of Office365.

In other words, AI becomes an upsell engine, not a disrupter.

Ackman sees Microsoft remaining central to the AI ecosystem due in part to its 27% stake in OpenAI, which he values at around $200 billion. He believes this stake, equivalent to around 7% of Microsoft’s market value, is not fully reflected in Microsoft’s forward PE (price to earnings) ratio.

The importance of diversification

Whether Hohn sold too early or Ackman purchased a dud will not become clear for many years, but the disagreement between two very experienced investors highlights the challenges of stock picking.

Taking a long-term view and building a balanced portfolio comprised of a broad range of companies and industries is a good way to mitigate the risk that any single stock doesn’t work out as expected and reduce volatility.