MSFT Stock Drops After British Hedge Fund Slashes $8B Stake, Almost Ends Decade-Long Holding

• Artificial intelligence poses a threat to MSFT’s dominant software products: TCI.
• Boosts stake in Alphabet from 3% to 5%.
• TCI top holdings include General Motors, Visa, and Moody’s.

Microsoft (MSFT) share price eased 1% on Friday after British billionaire Christopher Hohn’s TCI Fund Management nearly liquidated most of its position in the Windows operating system developer, citing concerns that the rapid evolution of artificial intelligence could undermine the tech giant's dominance in software.  

TCI reduced its Microsoft holding from 10% of its portfolio at the end of 2025 to just 1% by March 2026. The move represents the offloading of an approximately $8 billion stake in the software giant, the Financial Times reported, citing a quarterly investor letter. 

"We reduced our investment in Microsoft because the rapid progress in AI introduces uncertainty over Microsoft’s competitive position in the future," Hohn reportedly said in the letter. "We are primarily concerned about Microsoft's Office productivity software franchise, where AI could change established workflows and lead to the emergence of new productivity platforms, but we also see some risks in Azure," he added.

The decision marks a significant shift for TCI, which has been a staunch supporter of Microsoft for nearly a decade, benefiting from a roughly 400% rise in the company's share price over the past nine years. 

Hohn also holds stocks for an average of nine years, far longer than most other hedge fund traders typically do, in an effort to benefit from the long-term growth of high-quality stocks, FT said. TCI’s top holdings include General Motors, Visa, Moody’s, and the S&P 500. 

MSFT Hedge Fund Headaches

In 2026, several high-profile hedge funds have reduced their exposure to Microsoft, citing a range of reasons from valuation concerns to fears of long-term AI disruption. While Microsoft’s AI partnership with OpenAI initially fueled a massive rally, these recent exits have raised concerns around investor sentiment. 

Duquesne Family Office and Tiger Global are among the names that recently cut their exposure to Microsoft stock, citing AI-related disruption concerns. 

MSFT’s AI Ambitions 

Microsoft enjoyed an early first-mover advantage through its partnership with OpenAI, but that move is facing a tough test as Wall Street grows impatient with the pace of AI monetization. 

MSFT’s amended relationship with OpenAI has also raised a few concerns. While Microsoft remains a primary partner, OpenAI is now permitted to strike cloud deals with rivals like Amazon (AWS) and Google Cloud, ending Microsoft's exclusive access to the startup's newest innovations. 

Microsoft is also facing intense competition in the cloud segment. While Azure grew 40% in the first quarter of 2026, it was eclipsed by Google Cloud’s 63% growth, which Google attributed to its enterprise AI solutions becoming a primary driver. Meanwhile, AWS remains the market leader with a 28% share of the worldwide cloud market. 

MSFT Retail View 

Retail sentiment on Stocktwits was ‘bearish,’ and message volumes were ‘normal.’

One user raised concerns about the viability of investing in MSFT at the moment and highlighted the gains available in other AI-related stocks. 

The stock has dropped 4.2% over the past 12 months.

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