Billionaire Bill Ackman significantly reduced his stake in Alphabet (Google’s parent company) in the first quarter of 2026. The investor redirected the freed-up funds toward aggressive purchases of Microsoft shares, taking advantage of a sharp decline in their value amid market fluctuations earlier this year.

In the first quarter, Microsoft shares were trading at 21 times forward earnings, which Ackman considered an extremely attractive entry point. According to him, the company’s valuation was in line with the market average and significantly below its historical averages over the past few years, creating a rare opportunity to buy a tech giant at a discount.

The recent price of Microsoft shares, combined with market concerns over rising AI infrastructure costs, allowed Pershing Square to reallocate capital. Ackman emphasized that his investment strategy is built on the principle of finite capital: sometimes you have to sell great assets, like Alphabet, to buy even more promising ones at their current price.

Ackman has not lost faith in Alphabet but felt that Microsoft currently possesses a greater “margin of safety.” This trade repeats his successful 2023 pattern, when he bought Alphabet during a temporary price dip, after which the value of his initial investment nearly quadrupled.