Brind.
Part of The financial stakes in AI companies like OpenAI and Anthropic are impacting the operating income of major players like Microsoft, while Amazon benefits from its AI investments.

How could Microsoft excluding OpenAI investments affect Pershing Square's holdings?

Possible What happens if… A possibility worth considering, not a forecast.

Microsoft's adjusted earnings figures may influence the value of Pershing Square's stake Microsoft's decision to strip out investments in OpenAI when calculating Non-GAAP (adjusted) earnings per share resulted in an increase of 22% to $17.28 for fiscal 2026. This adjusted figure is a key input for market valuation multiples. Since Pershing Square holds a significant equity stake in Microsoft, any change in the stock's valuation, driven by these earnings and spending trends, directly impacts the value of their investment.

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How it reaches Pershing Square

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The facts so far

As reported. Each one links to where it comes from.

  • Non-GAAP (adjusted) earnings per share, which strip out the effect of Microsoft's investments in OpenAI, increased 22% to $17.28 for fiscal 2026.fool.com
  • Microsoft currently trades at about 31 times its fiscal 2026 adjusted earnings.fool.com
  • Operating income growth has slowed every quarter for a year.fool.com
  • Management expects capital expenditures of about $175 billion in calendar 2026.fool.com

Why it matters

Pershing Square is documented as holding and continuously accumulating a significant investment stake in Microsoft stock. For large institutional investors like Pershing Square, the value of their holdings is directly tied to the market's perception of Microsoft's future growth and profitability. The earnings report, by adjusting figures and providing guidance on slowing growth and high capital spending, provides critical data points that shape this market perception.

Microsoft's financial performance is a major indicator of the health of the technology sector, particularly in AI and cloud computing. The way the company reports its investments—specifically excluding them from adjusted earnings—is a key factor in how analysts model its true operational performance versus its strategic investments, which in turn dictates the valuation multiple applied to the stock.

What we don't know yet

  • How will the market react to the guidance suggesting operating income growth is slowing?
  • Will the market assign a higher or lower valuation multiple to Microsoft given its high capital spending?

Is this still moving?

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What would change this answer

Microsoft reports stronger-than-expected growth in Azure, its cloud computing platformThis would likely offset concerns about slowing operating income growth and high capital spending, potentially stabilizing or increasing the stock's valuation.
The market discounts Microsoft's adjusted earnings due to concerns over its high capital expendituresThe valuation multiple could decrease, leading to a negative impact on the value of Pershing Square's equity stake.

Who else could feel it

Other possible ripples from the same event.

Reporting

Keep going

The full eventMicrosoft Earnings Exclude OpenAI Investment Impact in Q1 2027 Everything aboutPershing Square

Brind's analysis is written by AI from the reporting linked above and can be wrong. This explainer is a possibility worth considering, not a forecast: steps marked as Brind's reasoning are not stated in the reporting. It is not investment advice; do your own research.