Ackman Explains His Google Stock Sale As He Buys Microsoft

Bill Ackman, founder and Chief Executive Officer of Pershing Square Capital, has explained why he sold his Alphabet (NASDAQ:GOOG) stock in favor of Microsoft (NASDAQ:MSFT).

Bill Ackman Explains His Thesis Of Selling Google Stock To Buy Microsoft

Earlier this week, we reported that Ackman had bought Microsoft shares, explaining that he believed that the company was compellingly cheap. He bought shares worth over $2 billion.

What he did not explain at the time was why he sold Google shares, which he had accumulated for months. In an X post, Ackman said that he was not betting against Google.

Instead, he believed that, at the current valuations, and because of his finite capital base, Microsoft offered better value. Ackman also noted that Microsoft was compelling because of its Azure business and its presence in the AI industry.

To be clear, our sale of $GOOG was not a bet against the company. We are very bullish long term on Alphabet. But at current valuations and in light of our finite capital base, we used $GOOG as a source of funds for $MSFT. https://t.co/0ePZI8p3Bh
— Bill Ackman (@BillAckman) May 16, 2026

Microsoft Stock Has Lagged The Market This Year

Ackman's Microsoft bet came at a time when its stock is stuck in a bear market. After peaking and forming a double-top pattern at $555 last year, it has dropped by 23% to the current $421.

*Microsoft stock has underperformed Google this year | Source: TradingView*

The company's underperformance is mostly because of its increased capital spending. Its capital expenditure rose to over $80 billion last year, a figure that will hit $190 billion this year. Investors are concerned about the return of investment over time and the potential disruption of some of its software by AI tools.

Microsoft calmed these fears a bit after its recent financial results, which showed that its Azure business grew by 40%, higher than the expected 39%. As a result, its stock has risen by over 6% since its earnings date.

Analysts expect that Microsoft's overall business will continue growing. The average estimate is that the annual revenue will grow by 16% in the next two consecutive years.

Its valuation has become relatively cheaper during the recent crash. Data shows that it trades at a forward price-to-earnings ratio of 24, lower than the five-year average of 34. It is also lower than the tech sector average of 31.

In contrast, Google's forward PE ratio has jumped to 27, higher than the five-year average of 23. This increase happened as the stock continued soaring and is now sitting at its all-time high. Its revenue growth is expected to be 20% this year and 18% next year, because of its strong market share in digital advertising and AI industries.

Image: ShutterStock