Pershing Square Points to Enterprise Backlog and Maia Chips in Microsoft Cloud Acceleration

Pershing Square Inc. pointed to accelerating performance across Microsoft Corp.'s cloud and artificial intelligence infrastructure in its third-quarter 2026 investor letter, arguing that traditional corporate adoption rather than frontier model development is anchoring the software maker's growth trajectory.

According to coverage of the investor letter by Yahoo Finance (https://finance.yahoo.com/technology/ai/articles/microsoft-corporation-msft-betting-big-193555181.html?.tsrc=rss), the fund reported that Azure revenue growth accelerated to 48% in the most recent quarter, while Microsoft 365 expanded by 18%. Pershing Square emphasized that the recent expansion in Azure's commercial backlog was powered entirely by standard enterprise customers rather than artificial intelligence research laboratories training frontier foundation models, a composition the firm said provides durable demand visibility.

The hedge fund tracked several operational and product launches that accompanied the quarterly revenue pace. Pershing Square highlighted Microsoft's consolidation of its Copilot chat, Cowork, Autopilot, and Code features into a unified client application, alongside the rollout of more than a dozen proprietary MAI models. The fund also noted the deployment of Microsoft's custom Maia accelerator chips across its datacenter fleet and the introduction of Project Perception, an agentic cybersecurity product designed to operate autonomously.

Microsoft's valuation multiple adjusted upward as public markets reassessed its AI positioning. Pershing Square stated that Microsoft's share price gained 38% during the third quarter and was up 27% year-to-date relative to the fund's average cost basis. The company's price-to-earnings multiple expanded from 19 times forward earnings to 25 times over recent months. Microsoft shares closed at approximately $507.12 on Nov. 2, 2026, valuing the company at roughly $3.77 trillion within a 52-week trading band of $349.20 to $551.15.

The letter also provided updates on Pershing Square's broader asset management operations. The firm posted third-quarter fee-related earnings of $63.7 million, up 13% year-over-year, while distributable earnings before taxes rose 8% to $61.0 million. Post-tax distributable earnings dropped 12% to $49.5 million, or $0.12 per share, reflecting corporate tax obligations following the firm's initial public offering. Fee-paying assets under management reached approximately $23.0 billion as of Sept. 30, 2026, with permanent capital accounting for 98% of the base. Pershing Square also deployed $110 million across seven private investments ahead of the planned launch of Pershing Square Ventures.

Looking ahead, Pershing Square told investors it anticipates high-teens earnings growth from Microsoft over the long term, maintaining that the stock remains undervalued even after its third-quarter run. The firm noted that broader infrastructure spending across tech giants remains elevated, citing third-quarter cloud revenue acceleration to 39% at Amazon Web Services alongside ongoing enterprise cloud commitments.