Bill Ackman Sold Alphabet to Buy an AI Stock Down Roughly 20% From Its High. Was That the Right Call?
2026-10-01 09:30
•Brett Schafer •The Motley Fool
•••••• •••••• Axe Cap view
Ackman’s Microsoft Pivot: A Lesson for SA Investors
Bill Ackman swapped Alphabet for Microsoft mid-2026, favoring a cheaper AI play that rewarded him—but what does this mean for JSE investors?
Ackman’s shift from Alphabet to Microsoft shows the value of cost-conscious tech investing. Microsoft’s pullback amid AI worries and enterprise software jitters got it trading at a more modest price-earnings ratio, around the low 20s, compared to Alphabet’s stretched 30s. The payoff has been clear—Microsoft surged 26%, while Alphabet slipped 15%. For South African investors, this underscores the risk of paying a premium for growth stories without a safety margin, especially when the rand still plays a role in tech exposure through global cost structures. While we don’t have a direct JSE equivalent for these US tech giants, the USD/ZAR rate remains crucial—it can magnify gains or losses from such foreign technology bets. Keep an eye on currency moves; a stronger rand can blunt returns despite company-level wins. If interest rates or global sentiment turn sharply, both stocks could stumble. this is just our opinion and not financial advice
Avoid chasing expensive SA-listed growth counters like Naspers or Prosus without a discount. Instead, watch USD/ZAR trends to time any offshore tech exposure, and consider trimming positions if Microsoft’s momentum fades or the rand weakens.
- USD/ZAR
- Naspers
- renewed US tech sell-off
- rand depreciation impacting returns
6/10
Bill Ackman's Pershing Square completely exited its Alphabet position to increase its stake in Microsoft during mid-2026. Microsoft, which had fallen ~20% from its highs due to enterprise software sector concerns and OpenAI-related uncertainties, was trading at a lower valuation (low 20s P/E) compared to Alphabet (low 30s P/E). The trade has paid off so far, with Microsoft up 26% and near all-time highs, while Alphabet is down 15%. However, both companies remain solid long-term investments with strong fundamentals.
Our take is based on reporting first published by The Motley Fool.