Jim Cramer warns investors not to give up on Microsoft’s ability to remain 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[Microsoft]is they actually have a balance sheet that allows them to do what they want to do,” Jim said on Friday’s show “Squawk on the Street.” “Tomorrow, they could do something so innovative that we say, ‘Why did we doubt them?'” Jim’s comments came after Bill Ackman’s hedge fund, Pershing Square, revealed that it has a significant stake in the software and cloud giant. Microsoft stock soared about 4% on Friday after Ackman shared an update on X ahead of Pershing Square’s quarterly 13F filing. According to FactSet, about 95% of analysts rate the stock as a “buy.” We’re a little more conservative and keep the stock’s rating at 2. Ackman said the recent decline in Microsoft stock, which is still down nearly 12% in 2026, is a rare opportunity to buy at a reasonable valuation. The hedge fund manager also said: “It’s encouraging to see Microsoft prioritizing R&D efforts and investment in Copilot, its own AI agent built into M365, with direct involvement from CEO Satya Nadella.” He added, “We believe these efforts will lead to faster product development and greater customer adoption over time.” MSFT YTD Mountain Microsoft YTD Pershing Square’s disclosure of Microsoft stock comes as the software giant faces concerns about the disruption of artificial intelligence. Investors are concerned that efficiency gains from AI will lead to fewer employees, putting pressure on the seat-based model of traditional services like Microsoft 365, which includes Word, Excel, PowerPoint, and Outlook. Ackman said he began building a position in Microsoft in February after his hedge fund plunged following fiscal year 2026 second-quarter results released in late January. Ackman also believes investors are underestimating Microsoft’s long-term potential. Although disappointed with Microsoft’s latest fiscal third-quarter report, Jim is confident that Microsoft has the resources it needs to move forward into its hotter AI business, despite recent stock market rotations. At Friday morning’s meeting, Jim disagreed that investors are rushing into enterprise software stocks without any meaningful catalyst at this point, including companies like Workday, ServiceNow, and Club, which owns Salesforce, in the wake of Ackman’s disclosure. “It’s not a game,” Jim said. He has repeatedly said that not all software stocks should be painted with the same brush. He feels that Microsoft’s business and stock price are more dependent on cloud growth than software. (Jim Cramer’s Charitable Trusts are long MSFT and CRM. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
