Bill Ackman gets into Microsoft for reasons similar to Cramer's arguments to hold it

An important development from the financial markets: Jim Cramer is warning investors not to sleep on Microsoft 's ability to stay competitive. Most of the analyst community agrees — and so does at least one billionaire hedge fund manager. "The main reason we don't want to sell is because they actually have the balance sheet to do what they want," Jim said on " Squawk on the Street " on Friday.

"Tomorrow, they could do something that is so revolutionary that we could say, 'Why did we doubt them? " Jim's comments came after Bill Ackman's hedge fund, Pershing Square , revealed a sizable stake in the software and cloud giant. Shares of Microsoft popped roughly 4% on Friday after Ackman shared the update on X ahead of Pershing Square's quarterly 13F filing.

Economic Details

According to FactSet, around 95% of analysts have a buy-equivalent rating on the stock. We're a bit more conservative, with our 2 rating hold on the stock. Ackman said the recent pullback in Microsoft shares, which are still down nearly 12% in 2026, was a rare opportunity to buy at a reasonable valuation.

The hedge fund manager also said he is "encouraged to see Microsoft prioritizing its R & D efforts and investment in Copilot, its own AI agent embedded across M365, with direct involvement from CEO Satya Nadella. " He added, "We believe these efforts will translate into improved product velocity and greater customer adoption over time. " MSFT YTD mountain Microsoft YTD The disclosure of Pershing Square's stake in Microsoft comes at a time when software enterprise giants are getting knocked on artificial intelligence disruption concerns.

Investors have been worrying that AI-driven efficiency gains could lead to workforce reductions, pressuring the seat-based model for its legacy offerings like Microsoft 365, which includes Word, Excel, PowerPoint, and Outlook. Ackman said his hedge fund began building its position in Microsoft back in February after a sell-off following its fiscal 2026 second-quarter results reported late January. Ackman also believes investors are underestimating Microsoft's long-term potential.

Analyst Views

Though disappointed with Microsoft's latest fiscal third-quarter report, Jim is confident that Microsoft has the resources needed to get ahead despite the recent rotation out of the stock into hotter AI plays. During Friday's Morning Meeting , Jim disagreed with investors piling into enterprise software stocks with no meaningful catalysts right now, including companies like Workday , ServiceNow , and Club holding Salesforce , following Ackman's disclosure. "That's not the game," Jim said.

He has said repeatedly that all software stocks should not be painted with the same brush. He feels Microsoft's business and stock are more dependent on cloud growth than on software. (Jim Cramer's Charitable Trust is long MSFT and CRM.

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Financial markets are tracking the development closely as investors assess the likely impact.