Sir Christopher Hohn’s TCI Fund Management has sold almost all of its massive Microsoft stake, warning investors that rapid advances in artificial intelligence threaten to disrupt the tech giant’s core businesses. The move, disclosed in an investor letter obtained by the Financial Times, sent Microsoft shares lower on Friday while the broader market rallied.
A Decade-Long Bet Unwound
TCI slashed its Microsoft position from roughly 10% of its portfolio at the end of last year to just 1% by the end of March, according to the letter. The stake had been worth approximately $8 billion. Hohn, who had held a substantial investment in Microsoft for much of the past decade, told investors that “rapid progress introduces uncertainty” about Microsoft’s position in the future.
He specifically flagged risks to Microsoft’s Office productivity software segment, where AI could upend standard workflows and spawn new competitive tools, as well as to Azure, the company’s cloud computing division. Microsoft has committed between $110 billion and $120 billion this year to AI data center spending, yet Azure growth has slowed and the stock has fallen roughly 14% year-to-date amid investor skepticism about returns on those investments.
Pivot to Alphabet
TCI simultaneously increased its stake in Alphabet, raising it from 3% to 5% of the portfolio and making it the fund’s largest technology holding. The shift suggests Hohn views Google’s parent as having more stable economics around AI monetization through search and advertising than Microsoft’s narrative around Office and Azure.
The reversal is notable given TCI’s track record. The London-based fund, which manages roughly $77 billion in assets, recorded $18.9 billion in profits for clients in 2025 — a single-year record for a hedge fund — and delivered a 27% net return. Microsoft had been a cornerstone of that success, with the stock rising nearly 400% over the past nine years.
Analysts Push Back
Wall Street remained broadly supportive of Microsoft despite TCI’s exit. Ivan Feinseth of Tigress Financial Partners raised his 12-month price target to $680 with a buy rating, arguing that AI initiatives are still early-stage. Barclays reaffirmed its Overweight rating, pointing to improving operational efficiency and growing adoption of Copilot AI tools. Goldman Sachs had previously called the stock’s 2026 decline a buying opportunity, maintaining a $600 target.
Microsoft shares fell approximately 1% in early Friday trading, while the Nasdaq Composite gained 1.1% and the S&P 500 climbed about 0.6%.
