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Ackman has had a great record over the past seven years. Now he’s making it easier for U.S. investors to buy in. They should be wary.

Key Points

After failing to pull off a U.S. fund offering in 2024, billionaire investor Bill Ackman is taking a little advice from Mary Poppins to help the medicine go down—he’s adding a little sugar via stock in his management company, Pershing Square Inc. While the terms are superior to what Ackman offered two years ago, investors may want to think twice before participating.

Here’s the deal: Both the fund and management company could come public in a rare twin initial public offering by the end of March. The closed-end fund, Pershing Square USA, could raise $5 billion to $10 billion, and Ackman already has lined up $2.8 billion from a group of investors, who will get a sweeter deal than public buyers.

Ackman plans to offer Pershing Square USA shares at $50 each, while Pershing Square Inc. will go public by distributing what could be 40 million shares to buyers of Pershing Square USA, in what amounts to a direct offering rather than a traditional IPO. For every 100 shares of Pershing Square USA purchased, a buyer will get 20 shares of Pershing Square Inc.

Barron’s estimates this could amount to a 10% bonus. Pershing Square Inc. could be valued at about $10 billion, in line with its valuation when Ackman sold a 10% stake privately to a group of investors in 2024. The management company should have about 400 million shares outstanding.

The environment isn’t great for bringing public both a new fund and an alternative asset manager. There has been a collapse in the stock price of marquee alt firms like Blackstone and KKR. Ackman, 59, isn’t deterred by the market turmoil, telling potential investors in a letter that “the greater the stock market disruption, the better for Pershing Square USA’s acquisition program.”

Pershing Square USA is a closed-end fund. That means it issues a fixed amount of shares, which then trade like stocks or exchange-traded funds. Investors cannot redeem their shares from Pershing Square. Their only liquidity is in the open market.

Closed-end funds can trade at a premium or discount to their net asset value. Unfortunately, U.S. equity closed-end funds usually trade at discounts ranging from 5% to more than 10%. The closed-end IPO market has been moribund, with minimal new issuance in two years, because investors don’t like the fund structure and the tendency of funds to trade at discounts. Ackman failed to take Pershing Square USA public in 2024 because buyers were worried the fund would immediately trade at a discount, resulting in losses on their investment.

Ackman vowed to resurrect the deal. His solution is to offer free shares of his management company as an incentive to buy Pershing Square USA so that investors are compensated for the risk that the closed-end fund moves to a discounted price. “We are giving you ‘bonus’ shares in PSI to thank you for your investment in PSUS, our first U.S.-listed investment fund, and because doing so makes good business sense,” he wrote.

Should investors take up Ackman’s offer on the new fund? The terms are certainly superior to what they were two years ago. Ackman also has had a great record over the past seven years. He plans to run a concentrated portfolio of 12 to 15 of what the prospectus calls undervalued “large-capitalization growth companies.” Ackman may also make macro bets involving bonds, currencies, or commodities. Based on Ackman’s existing investments, Pershing Square USA could contain Alphabe, Meta Platforms, Amazon.com, Uber Technologies, Brookfield, and Restaurant Brands International. It will be his first U.S.-listed fund and trade on the New York Stock Exchange.

Here are some of the problems. While Pershing Square USA could begin trading at a discount to its net asset value, shares of Ackman’s management company are supposed to offset those losses. The value of the bonus stock, however, is unclear. The fund will have a stiff annual fee of 2%, creating a hurdle for Ackman to beat the S&P 500 index and low-fee ETFs. Ackman’s management company is small relative to its many alt peers. It now runs about $16 billion in fee-paying fund assets. Even assuming a successful fund offering, the total would be $25 billion. Pershing Square might struggle to hold a $10 billion market value in that scenario, since that likely would be a big premium to peers based on revenue, earnings, and assets.

What’s more, investors have a ready alternative to the fund IPO. That comes in the form of Ackman’s main existing investment vehicle, Pershing Square Holdings, a $13 billion European-listed closed-end fund that trades in London and lightly in the U.S. under the ticker PSHZF. That fund is off to a tough start in 2026—it’s down 14% this year through March 10 based on its net asset value, against a drop of less than 1% for the S&P 500—after topping the benchmark index by about three percentage points in 2025. The fund has consistently traded at a 20%-plus discount to net asset value in recent years, and investors can buy it at a recent 23% discount to its NAV.

The European fund is taxed as a passive foreign investment company. Many U.S. investors avoid such funds because they see the tax treatment as onerous, says tax expert Robert Willens, but he doesn’t see it as a big negative. Investors buy master limited partnerships, and their tax treatment can be similar, he says.

Ultimately, the offering is a complex way for Ackman to reach U.S. investors and boost Pershing Square Inc.’s assets under management. Despite the bonus shares, investors are better off with the European shares—or simply waiting until the U.S. fund is trading at a potential discount before buying in.

Shares have been hammered by AI fears, but there’s a different story to be told: Microsoft has spent years preparing for this moment.

In the midst of the cloud’s emergence in 2011, venture capitalist Marc Andreessen famously declared that “software is eating the world.” Hardware was becoming commoditized and business software was taking over IT budgets.

Andreessen’s prescient call foreshadowed 15 years of transformation and arguably trillions in value creation. No legacy software company saw a bigger boost than Microsoft, which rode the cloud from stagnation to new heights.

But now it’s software—and Microsoft—getting served up on a platter, as artificial intelligence shifts priorities across the tech sector. While the iShares Semiconductor exchange-traded fund is up 10% this year, the iShares Expanded Tech-Software Sector ETF is down 20%.

Since peaking in July, Microsoft stock has fallen 28%, shedding $1 trillion in market value. For now, Microsoft and its software peers aren’t companies; they’re narratives of tech’s next generational disruption, all happening at blinding speed.

But there’s a different story to be told: Microsoft is ready for this moment.

“If I look at Microsoft up and down the stack—not just Azure, but the data layer, the developer layer, application, security, even assets like LinkedIn and gaming—I think they could be beneficiaries from AI,” RBC analyst Rishi Jaluria says. “The stock is trading at a below-market multiple on earnings. So I put all those pieces together, and the stock does feel very undervalued to me.”

Effectively, investors can buy Microsoft stock at a valuation close to the overall S&P 500 index. Microsoft, though, is anything but ordinary.

The company is still poised to boost revenue 16%, to $328 billion, for the fiscal year that ends in June, according to Wall Street analysts. Earnings per share are forecast to rise 21%, to $16.48. But what the market may be missing most is the company’s AI hedge, perhaps the best in the business. That comes thanks to CEO Satya Nadella’s prescient moves—cloud investments and his early backing of OpenAI.

And don’t count out what got Microsoft here in the first place: its software.

Apocalypse Now?

Microsoft’s products span tech categories and markets, from office productivity to enterprise resource planning to gaming consoles. The parts of the tech giant under direct threat from AI sit in the company’s Productivity & Business Processes segment. It contains Microsoft 365—formerly the Office productivity suite—other business software, and LinkedIn.

This remains the heart of Microsoft. In the first half of its fiscal 2026, Productivity & Business generated $67 billion in sales, 42% of the company’s revenue and over half its operating income. Segment sales grew by 16% from the year before, a strong showing from a mature business. The success helped propel Microsoft’s stock to a peak of $555 a share in July, giving the company a market value over $4 trillion.

But things started falling apart in the fall, as the market began paying more attention to AI’s threat to software—a selloff many began to call “The Software Apocalypse.” Today, the narrative around software sees Productivity & Business being pulled apart in several ways.

The worries stem from AI agents, software that sits on top of large language models, known as LLMs, and can accomplish a complex series of tasks from conversational commands. First to the scene last year were coding agents, which can write a large portion of the code for an application much faster than a human could. The cost per line of code has dropped significantly.

It opens up a huge set of questions for currently successful business software makers. If the cost of making finished software has declined rapidly, it removes a barrier for new competitors to enter the market. Customers could even decide to make their own custom software as a replacement.

The agent risk goes way beyond coding. Tools in a newer, more general category of so-called desktop agents have begun to gain traction among techies. These bots use LLMs to control a computer and could lead to many business functions now serviced by commercial software being replaced by agents operating on free, open-source alternatives.

Microsoft would see human users overwhelmed by machines. The subscription revenue model pioneered by cloud software would crumble, replaced by a consumption-based one that favors AI start-ups, chip companies, and cloud-computing hyperscalers. Microsoft’s staunch profit margin—the business software segment turns 82% of sales into gross profit—would have nowhere to go but down.

It’s the bearish scenario that Melius Research analyst Ben Reitzes envisioned in April 2024, when he wrote that “we could be in the midst of a generational shift where money flows out of expensive application software companies, and back into those who run the infrastructure that writes software.” Echoing Andreessen, he titled his note, “AI Is Eating Software.”

It’s the grim picture that has overtaken the market in recent months, leading to descriptions of a software apocalypse. But unlike its smaller peers, Microsoft is built to weather this storm.

Microsoft’s cloud business, mainly its Azure unit that rents out servers over the internet, is booming. Revenue grew nearly 40% in the second quarter, boosted by seemingly insatiable demand for AI computing. The company says growth could have been even faster if not for a shortage of data centers. This fiscal year, Microsoft will spend in excess of $100 billion on capital expenditures to try to increase that capacity.

Thanks to Azure, Microsoft’s Intelligent Cloud segment will soon overtake business software as Microsoft’s largest revenue source. But the sales growth will come with lower margins because nothing can match software for profitability.

At the end of the day, though, AI doesn’t work without the cloud because agents require vast computing resources. In other words, if the software apocalypse happens, Azure will thrive. Microsoft wins either way.

Azure is the first hedge against software disruption, and it’s expensive. But Microsoft’s second hedge is looking increasingly cheap.

OpenAI was founded in 2015 as a nonprofit dedicated to bringing free and open-source AI models to the world. It struggled to raise enough money to pay for the significant cloud computing required to train AI models. In 2019, OpenAI created a novel entity that could accept equity funding but was overseen by the nonprofit’s board. Microsoft was the first in, with a $1 billion investment.

OpenAI used the money to build ChatGPT, and less than two months after its debut, Microsoft invested another $10 billion. Those deals were mostly comprised of Azure credits, meaning Microsoft was getting an early investment into the AI start-up, while also building its own cloud. Together, Azure and OpenAI learned how to build AI infrastructure at scale, giving Microsoft a key head start in the AI revolution.

In the end, Microsoft committed a total of $13 billion to OpenAI. As OpenAI has raised more funds, its value has soared. Earlier this year, OpenAI announced a $110 billion funding round that included Amazon.com, Nvidia, and SoftBank Group. The deal valued OpenAI at $840 billion. Microsoft’s stake has been diluted along the way, but it’s likely sitting on an OpenAI stake worth more than $200 billion.

If the AI revolution plays out to the current script, Microsoft would be the largest shareholder of the world’s most important company.

For Microsoft bears to be right, a lot will have to go wrong at the same time. First, OpenAI would have to lose its AI pole position. (That’s not impossible: The internet’s big winners were once expected to be AOL and Yahoo!) Second, Microsoft’s Azure would have to lose sway inside the industry. As of now, it’s the No. 2 cloud player behind Amazon’s AWS—and it’s growing at a faster clip.

Finally, AI would, in fact, need to eat software. There’s not much evidence of that happening. The early indication is that AI will work with business software and not replace it.

Anthropic, the leader of the agent movement, gave a business-focused presentation last month that highlighted the use of existing software. It pitched agents as assistants that were really good at using Excel, PowerPoint, and other Microsoft applications. The moment caused investors to rethink software’s demise. Since then, the iShares software ETF has recovered some of its losses, and Microsoft stock has risen 5%.

Unlike the long-ago transition to the cloud, which undid many existing software firms, incumbents aren’t being complacent this time around. They’re acting as if their lives are at stake, and Microsoft is no exception.

The company has multiple AI initiatives across its business software, including its flagship product, a $30-a-month AI assistant for the Office apps named Microsoft 365 Copilot. It will soon add Agent 365, a platform for managing agents across an organization, and a new high-price bundle that combines all the AI services with Microsoft 365 and security services. Microsoft is doubling down on the subscription model.

After more than two years and a lot of hype, Microsoft 365 Copilot has 15 million paying users, 3% of its installed base. It’s a number that offers confirmation for both the bulls and bears. But in the long term, it may be irrelevant.

Microsoft always starts slowly and it isn’t much of an innovator. Instead, it just continuously iterates. “I was a Microsoft developer way back when,” says Jefferies software analyst Brent Thill. “The running joke in the community was, ‘The first product stinks, the second one’s better, and the third one’s where they get it right.’ ”

“It can take two to three years to build the software to make it stable,” Thill says. “It takes time to harden enterprise software.” At that point, Microsoft uses aggressive pricing and bundling, leveraging deep relationships with customers, to push it through multiple sales channels. In the end, Microsoft software and services bundles provide a lot of value, even as the price tag rises.

Says Charles Lamanna, Microsoft’s president for business apps, “What I tell my team: We need to build the best product at the best price, and we need to stay there for a long time. That’s how you are successful in this business.”

Microsoft’s five-decade history offers many examples of the slow-start pattern. Its Basic programming language and DOS operating system weren’t innovative in the market—but became standards. Word and Excel weren’t category leaders—until they were. Even Windows didn’t really change the world until the software’s fourth release. Microsoft was also late to cloud software, before doggedly making the pivot under CEO Nadella.

The only surprise now would be if Microsoft 365 Copilot were an instant hit. It may take a while for Microsoft to fully understand where its business software fits in the AI age, but it still has plenty of time, and it will find its footing.

At the moment, the sentiment around Microsoft stock doesn’t add up. On the one hand, investors look at hundreds of billions of dollars in AI data-center capex from Microsoft—and the other hyperscalers—and see an investment bubble. On the other hand, they expect AI to be so powerful that it takes over all knowledge work, destroying the value of enterprise software.

Both can’t be true, and Microsoft is positioned to come out an AI winner in a range of scenarios, even if its software is challenged.

Reitzes, the Melius analyst who sees a rough road for software, recently downgraded Microsoft to Neutral, giving him a rare non-Buy rating on the stock. But much of the bear case may be priced in.

Microsoft’s stock trades at a forward price/earnings ratio of around 22, making it less prized than Coca-Cola, Home Depot, and Colgate-Palmolive. The last time Microsoft stock traded at this level, in January 2023, shares soared 73% over the next 12 months.

Relative to the S&P 500, Microsoft is the cheapest it has been in a decade.

At some point, Microsoft will stop being a narrative and start being a company again. When that happens, investors will rush to fix their math.

Google completed its $32 billion purchase of Wiz this week, finalizing a real windfall for those who invested in the cybersecurity startup.

But even the tech investors who missed out on backing Wiz stand to benefit.

After many years of regulatory challenges from the U.S. and abroad, the ability for a big tech company to complete a mega deal flashes a green light for others to follow.

It wasn’t a coincidence that Google announced its plan to buy Wiz in January 2025—just as Trump took office. The outgoing Biden administration had a reputation for opposing tech mergers, and his Federal Trade Commission chair, Lina Khan, had attempted to break up big tech companies such as Meta Platforms.

Just a year earlier, Wiz and Google had tried to reach an agreement, but the transaction never happened—partly because Wiz didn’t want to face the same regulatory hurdles that thwarted Adobe’s attempt to buy Figma in 2022. In the last administration, startups were sometimes turning down lucrative acquisition offers rather than roll the dice with the government.

It wasn’t just Google-Wiz that took advantage of the new climate. Last year, the value of North American tech company acquisitions surged 93% to $736 billion, according to a report from law firm Morrison Foerster. There were also a record number of tech deals valued over $10 billion, said the report.

Bryan Taylor, managing partner at Advent International and an investor in Wiz since leading a round in 2021, said it’s not just the changed regulatory environment that’s leading to more tech M&A. He said there’s a lot of promising assets for companies to buy, including AI startups that can improve innovation. He also pointed to market volatility, which creates an opportunity for buyers to get a deal on software businesses.

While the increase in acquisitions is welcomed by the venture industry, it’s not nearly enough. There are still more than 1,000 unicorns that have yet to exit.

Eighteen months after selling his startup to chipmaker AMD for $665 million, Finnish entrepreneur Peter Sarlin has left his role as CEO of the unit now known as AMD Silo AI. He is now chairman at two new ventures: physical AI lab NestAI, and QuTwo, an AI startup aimed at helping companies prepare for the era of quantum computing

Currently fully funded by Sarlin’s family office, PostScriptum, QuTwo describes itself as “an AI lab for the quantum era.” Rather than waiting for quantum computing to mature, however, it is already working with enterprise customers — including European fashion retailer Zalando, with which it is developing what the two companies call “lifestyle agents,” AI tools designed to go beyond product search and proactively suggest products and experiences.

QuTwo is built on the premise that AI is hitting an efficiency wall that quantum computing may eventually help solve. But the company is not betting on when that will happen, Sarlin told TechCrunch. Instead, the startup is building QuTwo OS as an orchestration layer that allows companies to shift from classical to quantum computing — making use of hybrid computing along the way.

Sarlin invested in Finnish quantum companies IQM and QMill through PostScriptum, and is one of a growing number of investors who believe it will eventually outperform classical computers in a wide range of industry applications while easing AI’s energy demands. But he also thinks that initial use cases will require mixed hardware environments, and that enterprises would rather focus on their business problems while QuTwo OS takes care of the routing.

In that respect, the potential advantage of the middle ground known as “quantum-inspired” computing is that it is already viable today, because it uses classical hardware while simulating quantum behavior, working around the hurdles that still hinder quantum hardware. Meanwhile, QuTwo OS is designed to be flexible, supporting quantum or non-quantum algorithms and chips alike.

QuTwo’s team brings experience on both sides of the quantum-AI divide. On the quantum side, there’s IQM cofounder Kuan Yen Tan and board member Antti Vasara, also chair at SemiQon, a Finnish semiconductor startup focused on quantum chips. The enterprise side is equally represented, by Sarlin himself and Kaj-Mikael Björk, one of his former cofounders at Silo AI. Pekka Lundmark, the former CEO of Finnish telecom giant Nokia, also joined QuTwo’s board.

Across both areas, the team counts over 30 quantum and AI scientists, and Sarlin is clear where the company stands. “We’re building for the quantum world, but QuTwo is an AI company,” he said, meaning that QuTwo is “pushing AI workloads from classical to quantum.”

This also means that its customer base could be quite broad. Beyond Zalando, QuTwo also launched a joint quantum AI research initiative with OP Pohjola, a major Finnish financial services provider.

From the outset, QuTwo has been commercially minded and already has “large design partnerships which are in the tens of millions,” Sarlin said. Design partnerships — in which a vendor co-develops its product alongside enterprise customers — are a way for QuTwo to learn what those customers expect as it builds its product. They are also a bet from enterprises looking to establish early footing when and if quantum computing does arrive.

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Investors ask to cash out 14% of Cliffwater’s $33 billion fund while Morgan Stanley caps withdrawals

The private-credit engine that powered massive growth on Wall Street is sputtering, with investors trying to pull money out of big funds, forcing firms into uncomfortable decisions and endangering their future profits.

The latest example came Wednesday when Cliffwater told clients that investors in its largest fund asked to cash out 14% of their money this quarter. The $33 billion fund will pay out about 50% of the redemption requests, meaning that the other half will need to wait at least another quarter to exit.

Cliffwater sold its funds primarily to individual investors, a playbook that larger competitors like Apollo Global Management, BlackRock, Blackstone and Blue Owl adopted, making them all increasingly dependent on “retail” money for growth. They harbored hopes of getting an even bigger slice of individuals’ money, pushing to get access to 401(k)s.

The strategy started backfiring unexpectedly in recent months. Some bad loans from both private lenders and banks raised questions about other potential losses. As a herd mentality spread, investors raced to get out the door.

At the same time, the investment firms’ stocks are tumbling, with Blue Owl now off more than 40% this year. Banks including JPMorgan Chase are reassessing the risk of their own exposure to the industry.

Though the firms can limit how much gets out each quarter, meaning dramatic collapses are unlikely, the flight of money could stay elevated in coming quarters, analysts said. They point to a similar slow bleed from real-estate funds in 2022 that built up over months and took years to recover from.

“Retail capital is going to be a lot more cautious,” said Leyla Kunimoto, an individual investor in private funds and author of a newsletter about the industry. “In the short-term there is not going to be one financial adviser allocating money to them.”

Executives in the private-credit world say there is overreaction to a few bad investments, and that their industry is healthy. The bulk of the corporate loans the funds invest in are performing well, unlike the commercial mortgages in real-estate funds, which sank in value when interest rates jumped four years ago.

Cliffwater’s fund has returned 0.74% this year after fees and returned nearly 9% last year with minimal losses, it told investors. It said the higher-than-usual redemptions are the result of unfounded media hysteria.

Redemptions aren’t the only threat. The flow of new investments into the funds is also slowing, adding pressure to stocks as analysts cut forecasts for future fee earnings.

There are also signs that the turmoil in private credit funds is impacting other parts of the debt markets.

One of the few investments the funds own that they can easily sell in times of trouble are bonds of collateralized loan obligations, or CLOs, which are backed by bundles of corporate loans. The higher-yielding CLO bonds that private-credit funds primarily hold lost 4.1% in February, a sharp reversal from gains of 1% in January and December, according to research by Santander U.S. Capital Markets.

The redemption requests are putting the firms in uncomfortable situations.

Unlike a mutual fund or a bank deposit, most of these closed-end funds limit the amount that investors can withdraw each quarter. Cliffwater spent days weighing whether to keep payouts at 5% before deciding to raise them to 7%, in part to avoid being viewed unfavorably to competitors, a person close to the company said.

Blue Owl last month allowed investors to withdraw 15% from a fund focused on private credit to technology companies that normally caps redemptions at 5%.

Blackstone’s credit fund, the biggest in the industry at $82 billion, for the first time had net withdrawals, meaning more money went out than new money came in. The fund allowed about 8% redemptions.

Others have stuck to the limits, meaning investors didn’t get all their money back. BlackRock and Morgan Stanley both only redeemed the predetermined 5% of their funds when investors asked for more.

Cliffwater started out as a small investor in private equity and debt about 20 years ago. The firm also provided research, including private-credit indexes that grew in popularity alongside the industry. Run by founder Stephen Nesbitt, the firm used the index business to sell individuals on funds that invest primarily in other private-credit funds and the corporate loans the outside managers make.

Cliffwater this week sought to calm any concerns about its ability to pay out future redemptions. Between loans maturing, bank credit lines and other sources of liquidity, Cliffwater projected that it could handle two years of zero inflows and the 5% redemption rate it typically offers without selling any assets.

In most quarters, redemption requests at Cliffwater Corporate Lending Fund came in well below 5%, with two relatively recent exceptions, according to a presentation reviewed by The Wall Street Journal.

Investors had already been watching Cliffwater closely.

Hedge-fund manager David Rosen of Rubric Capital Management singled out Cliffwater in a letter to investors last month that warned about the risks lurking in private-credit portfolios and urged all investors to get out of the asset class while they could.

“We would not be surprised if Cliffwater is the canary in the coal mine and will be the first domino in the ‘bank run’ we foresee,” Rosen wrote in the letter, which the Journal reviewed.

The private-credit industry could also see pressure on funds from the banks that lend to them, with some bankers saying they expect to become more conservative or retreat.

Bank boards and management teams have recently launched fresh examinations of exposure to private credit including reviewing loan portfolios and collateral advance rates, according to people familiar with the matter. Still, executives said there was no evidence of a systemic issue and that banks were well-positioned to deal with any stress in private credit.

JPMorgan reduced the amount of credit available to some private credit funds after it marked down loans they had extended to software companies, according to people familiar with the matter.

U.S. bank loans to non-depository financial institutions that include private credit reached $1.2 trillion as of mid-last year, according to Moody’s Ratings. That was nearly triple the share from a decade ago.

Despite constant military pressure, security services have a strong grip on the streets, and protesters are afraid

JERUSALEM—Israeli officials now assess that Iran’s ruling regime is unlikely to fall in the immediate future, as Tehran’s battered rulers remain in control and conditions on the ground aren’t yet ripe for a popular uprising, people familiar with the matter said.

Nearly two weeks into the war, Iran’s military and political leadership appears functional and responsive to events, while its domestic opponents have been cowed by a heavy security presence. Israeli officials assess that changing the equation would likely require many more weeks or months of fighting.

Israeli Prime Minister Benjamin Netanyahu said on Thursday that he wasn’t sure if Iranians would be able to topple the Islamic republic although he said Israel was working to create the conditions that would allow for it.

“I can’t tell you with certainty that the Iranian people will bring down the regime,” Netanyahu said. “If it doesn’t fall, it will be much weaker.”

On Thursday, the Israeli military laid out more limited goals for its activities, focusing on degrading Iran’s military capability so the regime can’t pose as much of a threat to Israel and the region.

“Our job as a military is when we see a threat to minimize it and push it away for as long as possible,” Israeli military spokesman Nadav Shoshani told reporters Thursday. “And after that there are more steps at different levels that are beyond the IDF,” he said, referring to the Israeli military.

The U.S. and Israel are likely to continue pushing to weaken the regime through economic pressure and covert activity even after any halt to the fighting, people familiar with the matter said.

President Trump and Netanyahu began the conflict calling on Iranians to take control of their country. Since then, U.S. officials have increasingly focused on narrower goals of destroying the country’s military capability, nuclear program and ballistic-missile arsenal.

Netanyahu continues to publicly encourage Iranians to prepare to take to the streets, saying the moment to act is coming. He has hinted that Israel has surprises in store for Iran.

The regime has so far proven resilient and has continued striking back, exacting a growing toll on the U.S. and its allies and the global economy.

A pair of fuel tankers were hit Wednesday night off Iraq, following attacks on cargo ships and oil tankers that have all but shut down the crucial Strait of Hormuz waterway. Dubai residents reported a series of missile warnings and intercepts early Thursday, and Gulf countries such as Bahrain and Saudi Arabia continued to be targeted in attacks. Meanwhile, Iranian security services appear to have solid control of the streets.

Iranian state media published a statement Thursday that it attributed to its new supreme leader, Ayatollah Mojtaba Khamenei, his first since replacing his father, who was killed in the opening salvo of the war. In the statement, he vows revenge for U.S. and Israeli attacks, orders his forces to keep the Strait of Hormuz closed and threatens to open new fronts in the war. But the statement wasn’t accompanied by video or audio, fanning speculation about his condition.

Amir Avivi, a former senior defense official close to the Israeli government, said a few more weeks of military pressure could lay the groundwork for an uprising, but that the outcome would be hard to predict.

“There was a decision to make the conditions for people to take to the streets,” he said. “We are not there yet.”

Creating conditions for regime change through a military campaign was always a tall order, said Assaf Orion, the former head of strategic planning for the Israeli military.

“There is no recipe for this. It’s not mechanical engineering,” he said. “The war is planned to last weeks, and these processes can take years.”

Israeli Foreign Minister Gideon Sa’ar acknowledged as much in an interview Wednesday with the Times of Israel. He said military action alone can’t topple Iran’s regime, which is something that needs to be done by Iranians themselves and isn’t likely to happen until after the war. “Usually such things happen after the military campaign, less so when there’s a war,” Sa’ar told the Times.

Judging the resilience of Iran’s rulers is tricky given the opaque nature of the regime’s inner circles and the lack of a sustained foreign military presence on the ground. They could come under heavier pressure as the U.S. and Israel continue their attacks.

Despite Netanyahu’s public statements, Israel’s security services have said it would take time to grind down the Iranian regime and that they were facing a ticking clock once the war began.

Once it got control of Iran’s airspace, Israel’s air force began hitting Iran’s repressive apparatus in earnest, striking the bases and command centers of domestic security forces in the hope of creating the conditions for a popular uprising. Those strikes are increasing, an Israeli military official said Wednesday.

Trump has said in interviews this week that the war in Iran could end soon, without providing a timeline. Israel hopes for additional time to fight, but officials are aware Trump faces domestic pressure and could end the war abruptly, one of the people familiar with the matter said.

A failure to unseat the regime could leave a hard-line and emboldened regime in the war’s wake. “If this doesn’t succeed, you have to live with the results,” Orion said.

There is no clear mechanism for unseating the regime. Trump toyed last week with the idea of Kurdish involvement in the war. But Iranian-Kurdish armed groups—mostly based in neighboring Iraq and in border areas—say the conditions aren’t there and that Iranian government forces are still too strong.

Domestic discontent with Iran’s government is running high. But the government retains its monopoly over the use of force. Residents said members of the paramilitary Islamic Revolutionary Guard Corps and of the Basij, their plainclothes enforcers, are visible on the streets of Tehran and other Iranian cities.

Security forces are threatening would-be protesters with a shoot-to-kill order, raising the possibility of a repeat of the January crackdown, when thousands of antigovernment protesters were killed.

They have also adapted to the punishment. Despite intense Israeli strikes in the city of Isfahan, security forces still appear to control the city. Members of the Basij have been roaming the streets on motorcycles brandishing guns and flags of the Islamic Republic, one resident said.

Many opponents of the Iranian state believe that rising up against their leaders under the current conditions and with no guarantee of continued foreign military support would be suicidal.

The Isfahan resident said he met with friends late Wednesday, and they ruled out resuming protests for now, saying many are losing hope amid threats from the regime. A woman in the city of Mashhad said opponents of the government still want to bring down the Islamic Republic, but said they are also staying at home for fear of a crackdown.

A resident of the northern Iranian city of Rasht said it was unrealistic to rely on unarmed civilians to topple a regime accused of killing its people en masse, adding it would be a bloodbath.

War in the Middle East has prevented tens of thousands of people in Asia from getting home

European passengers stuck in Asia two weeks after the Iran war threw global air travel into chaos have resorted to chartering private jets or paying significantly higher prices to get home.

Others are taking circuitous routes via America to return to Europe after Gulf transfer flights that dominate the route all but ceased and left tens of thousands of passengers stranded, according to travel and industry executives. 

“You are seeing odd routings, with people going back via the Pacific, going through the US, but that’s a very long way round,” said John Strickland, an aviation consultant. 

Airlines offering direct services have raised prices in the face of a “drastic” increase in demand. This week, Cathay Pacific was selling business-class seats from Sydney to London – stopping in Hong Kong – at £20,000 each. 

“Currently it’s very dynamic, it’s changing all the time so we will charge according to supply and demand in the market,” said Cathay Pacific CEO Ronald Lam. 

Cathay’s flights between Hong Kong and Europe “were pretty full even before the conflict so the room to take on more bookings is quite limited really”, Lam added. 

A third of the flights between Europe and Asia pass through the Gulf, as do about half of those to Australasia, according to data group Cirium. 

But airports across the Gulf have either shut or had operations significantly curtailed while airspace in the region has been closed owing to missile and drone attacks.

Dubai and Abu Dhabi are operating limited services but Qatar remains closed apart from repatriation flights. Almost no transfer passengers are using the region.

Cirium estimated that more than 4mn passengers worldwide had been hit by disruption after a huge number of flights globally were cancelled.

While many travellers were in the Gulf, tens of thousands who had expected to travel through the region were left stranded in Asia. A shortage of flights meant they have had to find other ways home, including hiring jets, said travel and aviation executives. 

Private jet operators — who were swamped with bookings with people leaving the Gulf last week — have reported a rise in bookings for passengers returning from Asia. 

Global Charter, a private jet booking service, recently rented two planes for passengers in the Maldives who had been due to fly commercially through the Gulf. One flight travelled to Copenhagen with a stop in Baku in Azerbaijan to refuel while the other went directly to London, said co-founder Dan Hurley. 

Chartering a plane can cost anything from high tens of thousands of pounds into the hundreds of thousands of pounds, depending on the size of the aircraft and distance.

Commercial airlines including Malaysian, Cathay and Air India have already put on additional flights connecting Europe and Asia. But the loss of Gulf airports has strained a global air system that was already running near capacity because of a shortage of aircraft — leading to steep price increases.

“There are hardly any flights,” said a travel agent who has been trying to help clients travel to Australia. 

“The airlines generally can’t simply snap their fingers and bring capacity from Chicago or London to Tokyo or Sydney on demand,” said Mike Arnot, an airline industry commentator.

Prices for a one-way ticket from Australia to London in economy are £3,000 for flights through Malaysia and Istanbul, £8,000 to travel through Taipei and then over Russian airspace on a Chinese airline, and £9,000 to fly east through Vancouver and Toronto on a series of Air Canada flights.

Flights through the Gulf would previously cost less than £1,000.