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Is it time for another activist investor to take a run at Microsoft? Shares of the iconic software giant are down nearly 16% so far this year, making it the worst performer of the big tech names. The Financial Times reported on Friday that British hedge fund TCI had sold “almost all” of its stake in Microsoft, citing uncertainty about how AI could undermine the company’s big Office productivity software business.
TCI isn’t the only investor lately to mutter that Microsoft’s business is laboring under some dark clouds. And with SpaceX’s giant IPO just a few weeks away, there’s reason to believe investors will fund purchases of SpaceX stock by selling their shares in existing big tech names. That suggests pressure on Microsoft shares could worsen in the next couple of months.
While there are real questions about how AI will affect enterprise software incumbents like Microsoft, some of this negativity seems overdone. Microsoft’s Azure cloud unit is growing at close to 40% annually which is impressive given its size. The overall company’s top line is expected to expand 17% in the year to June 30, according to S&P Global Market Intelligence. For a 51-year-old giant like Microsoft, that’s not bad. Moreover, it has made a bundle—as we outlined here today—on its $13 billion investment in OpenAI, and it will continue to benefit as the ChatGPT firm grows, thanks to its shareholding.
Some on Wall Street think investors have got things wrong. UBS put out a report on Monday calling out Microsoft, as well as OpenAI and Nvidia, as “key enterprise AI winners.” The company has “enormous enterprise AI credibility and distribution,” UBS said. At the very least, you could say, Microsoft seems to have a marketing problem. But some might say the conglomerate nature of its business is also an issue, causing investors to undervalue the company.
Not only is Microsoft a cloud and enterprise software giant, it’s big in gaming—remember the $75 billion purchase of Activision Blizzard in 2023, which added to its Xbox business—and it has a small internet search engine in Bing. It also owns professional social media site LinkedIn.
Maybe it’s time for Microsoft to restructure, carving off some of the less core pieces. For example, chances are Microsoft’s shares aren’t reflecting much if any value for the gaming unit—so spinning it off as a separate company would allow investors to better value it. This seems the sort of thing an activist would seize on, calling for a streamlining of the business.
You might say Microsoft is too big for an activist—its market capitalization is $3 trillion—but we’ve been here before. In early 2013, when Microsoft stock had been stagnant for more than a decade, ValueAct Capital took a stake in it. A few months later, Steve Ballmer announced his intention to step down as CEO, paving the way for Satya Nadella to take the reins and begin a transformation that lifted Microsoft’s market capitalization to new highs.
Nadella doesn’t need to step down to change investor sentiment. But Microsoft needs to do something to change the narrative.
AI and Jobs
Who said AI would lead to mass unemployment? It seems AI is creating lots of job opportunities—including some for explaining to other people how to use AI.
We reported today that Google planned to hire “hundreds of engineers” to help its customers use its business-focused AI products. On Monday, OpenAI said its new partnership with investment firms, OpenAI Deployment Co., had acquired a consulting firm that would add about 150 consultants to help businesses use AI, with the goal of getting organizations to adopt it.
The hiring of these consultants might not offset all the job losses among engineers and others prompted by AI. But it might help just a bit!
In Other News
• The House Oversight Committee has opened an investigation into OpenAI CEO Sam Altman’s personal investments and their ties to OpenAI’s commercial partnerships.
• SAP announced a new agreement with Anthropic that will make it easier for SAP customers to build agents using the startup’s Claude models through a deeper integration between their respective products.
• Google is considering using SpaceX or another rocket launch to launch its experimental orbital data centers, the Wall Street Journal reported on Tuesday. Google was an early SpaceX investor and owned 6.1% of the company at the end of 2025, regulatory filings show.
• Google will start offering buy now, pay later services Affirm and Klarna for AI-powered shopping transactions in its Gemini app and its AI search mode, the rival fintechs announced on Tuesday.
• BuzzFeed is separating its film and TV production studio and its Tasty food video unit into a separate company, BuzzFeed Studios, and will look to attract new investors, the company said in a securities filing. The restructuring coincides with media mogul Byron Allen’s planned purchase of a majority stake in the company.
• Ebay told investor Ryan Cohen his $56 billion cash and stock bid for the online auction marketplace was “neither credible nor attractive,” delivering an expected rejection.
• Chinese social media giant Kuaishou Technology said in a regulatory filing on Tuesday that the company’s board of directors is assessing a restructuring of its Kling AI video business that may involve raising outside capital for the unit, confirming an earlier report by The Information.
Today on The Information’s TITV
Check out today’s episode of TITV in which we unpack our latest reporting on Microsoft and OpenAI’s revised revenue sharing agreement.
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