Billionaire Bill Ackman Sold Alphabet and Bought the Dip in This Magnificent Artificial Intelligence (AI) Stock Instead

The starkness of that sell-off — more than 18% over the course of a few sessions — gave the impression that investors feared that Microsoft’s heavy spending on data centers and its partnership with OpenAI might not deliver returns fast enough to offset ongoing margin and cash-flow pressures.

While these concerns were valid, Ackman likely viewed the market’s reaction as overly pessimistic. Per his post on X (formerly Twitter), Ackman began accumulating Microsoft stock in February — ultimately building a core position of roughly 5.6 million shares.

At the time, Microsoft was trading at forward price-to-earnings (P/E) multiples between 20 and 23 — meaningfully below the levels it traded at previously during the AI revolution.

MSFT PE Ratio (Forward) data by YCharts.

Ackman’s decision to buy the dip made strategic sense for several reasons. Microsoft’s AI initiatives, particularly Copilot productivity tools and the Azure cloud infrastructure layer, position the company to capture monetization from generative AI at scale across both consumer and enterprise workflows.

By allocating capital at a normalized valuation into a blue chip business with durable competitive advantages, Pershing Square essentially secured a position in one of the world’s premier big tech franchises at a rare discount.

Is Microsoft stock still a buy?

As of this writing (May 19), Microsoft stock has started to rebound from its 2026 low points. Nevertheless, shares are still down roughly 23% from the all-time high they touched late last year.

In my view, the company’s valuation remains reasonable relative to its expected earnings growth. Meanwhile, the average 12-month price target among sell-side analysts covering Microsoft stock is $560 — about 34% higher than current trading levels.

Although Microsoft stock is not the screaming bargain it was back in February, I think it still qualifies as a compelling compounder trading at a price that will reward patient investors over a long time horizon.

Should you buy stock in Microsoft right now?

Before you buy stock in Microsoft, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Microsoft wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $481,589!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,345,714!*

Now, it’s worth noting Stock Advisor’s total average return is 993% — a market-crushing outperformance compared to 208% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.

See the 10 stocks »

*Stock Advisor returns as of May 23, 2026.

Adam Spatacco has positions in Alphabet and Microsoft. The Motley Fool has positions in and recommends Alphabet and Microsoft. The Motley Fool has a disclosure policy.

Billionaire Bill Ackman Sold Alphabet and Bought the Dip in This Magnificent Artificial Intelligence (AI) Stock Instead was originally published by The Motley Fool