Observed Signal · May 9, 2026 · Divestment · Source: Manager Magazin · Impact: 2/5 · Sentiment: Neutral
TCI Sells Almost Entire Microsoft Stake
TCI, the hedge fund run by Christopher (Chris) Hohn, has sold almost its entire holding in Microsoft. Over the past decade the fund accumulated a Microsoft position worth about $8 billion, but cited rapid AI-driven change as a threat to Microsoft’s future competitive position—particularly in Office and potential risks for Azure. According to a letter seen by the Financial Times, TCI reduced Microsoft exposure from 10% of its portfolio at the end of last year to roughly 1% by the end of March. The fund increased its Alphabet position (from 3% to 5%) and reported a record net profit of $18.96 billion last year, managing about $77 billion at year-end.
A large hedge fund materially reducing exposure to a major tech incumbent signals investor concern about AI-driven disruption and may influence tech sector allocations and market sentiment, but it is not a platform policy or technical change that would directly shift the AdTech ecosystem.
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Key Takeaways & Evidence Grounding
- TCI reduced its Microsoft holding from about 10% of the portfolio at the end of last year to roughly 1% by end of March.
- TCI had built a Microsoft position worth around $8 billion over the past decade.
- Chris Hohn said AI-driven advances create uncertainty for Microsoft’s Office business and pose risks for Azure.
- TCI’s largest tech position is now Alphabet, which rose from 3% to 5% of the fund’s portfolio.
- TCI reported a net profit of $18.96 billion last year and managed about $77 billion at the turn of the year.
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Cramer: Microsoft Selling to Fund AI Picks Won't Last
Jim Cramer said on CNBC that investors rotating out of Microsoft to buy higher‑flying AI-related stocks is a temporary dynamic. He continues to hold Microsoft in his Investing Club Charitable Trust, arguing the company will respond to pressures around its enterprise software 'seat' business and improve Copilot. The article cites Microsoft’s recent quarter (Productivity and Business Processes revenue of $35.01B, Intelligent Cloud revenue of $34.68B), a 14.5% year‑to‑date decline in the stock, guidance for Azure/cloud growth of ~39–40%, and Microsoft reporting over 20 million paid Microsoft 365 Copilot seats. Goldman Sachs is noted as more bullish with a higher price target, while Cramer’s Investing Club maintains a hold-equivalent rating and $500 target for MSFT.
Microsoft short interest decade high ahead of Q2
Investors have grown unusually bearish on Microsoft ahead of its Q2 earnings as concerns mount over whether the company’s heavy artificial‑intelligence spending will produce adequate returns. About 92 million Microsoft shares are sold short, equal to 1.27% of its public float — the largest short interest as a percentage of float since May 2015, according to S3 Partners. Analysts and investors flagged broader sector capital expenditure moves after Alphabet raised its 2026 capex forecast and reported accelerating cloud growth, a development that knocked major tech shares lower. Microsoft in April projected roughly $190 billion in capital expenditures and finance leases for the year, including about $25 billion from higher component costs. Microsoft shares are down more than 18% year‑to‑date and have underperformed the S&P 500 substantially.
Bill Ackman Stakes in Microsoft Echo Cramer's Hold Call
Pershing Square, Bill Ackman’s hedge fund, disclosed a sizable stake in Microsoft on May 15, 2026, prompting Microsoft shares to jump about 4% after Ackman posted the update on X ahead of Pershing Square’s quarterly 13F filing. Ackman said he began building the position in February after a post‑earnings sell‑off and cited a pullback as a buying opportunity, praising Microsoft’s R&D prioritization and investment in Copilot — an AI agent embedded across Microsoft 365 — with direct involvement from CEO Satya Nadella. CNBC’s Jim Cramer similarly urged investors to hold Microsoft, citing the company’s balance sheet and cloud growth. The article notes analyst sentiment is strongly positive (FactSet: ~95% buy‑equivalent ratings) even as investors debate AI-driven disruption to legacy seat‑based software models.
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