When Michael Burry takes action, people pay attention. Not because he is always right, but because he tends to act before the crowd catches on. And what he just did in the software industry is exactly the kind of contrarian bet his reputation is built on.
The stock he bought is one of the biggest companies in the world. And the reason he bought it is much clearer and more interesting than a simple bullish call in tech.
In a Substack post published on April 23, Burry revealed that he has started a new long-term position at Microsoft. He also increased the number of stakeholders in MSCI, PayPal, and Adobe, positions he had just begun to build.
The timing is deliberate. Software stocks took a hit on April 23 following disappointing earnings guidance from IBM and ServiceNow, which investors interpreted as a warning about AI disrupting demand for business software. Burry saw that as an overreaction.
A fund manager buys and sells
“Software stocks sold off hard today on some earnings news from IBM and ServiceNow that investors took as an indication of the AI threat,” he wrote in a Substack post, CNBC noted. He said he sees an opportunity for “bombed software and payment stocks” and confirmed that he did not sell any of his software holdings during the selloff.
He also said he has “legitimately” analyzed Microsoft and believes it has a competitive path to growth despite AI-related concerns, the Motley Fool said.
Microsoft has had a hard time expanding. The stock is down about 25% from its July 2025 record high and 13% year to date, according to 24/7 Wall St. We gained about 18% from the recent decline in the weeks before Burry’s post, but we remain below the peak.
That kind of price action is exactly what attracts the informal investor. Burry often buys high-quality businesses when sentiment has driven prices lower than expected. Microsoft fits that description cleanly right now.
The business itself is not broken. Microsoft’s commercial cloud segment, which includes Azure, Office 365, and Dynamics, generates recurring subscription-based revenue with margins that most technology peers can’t match. Azure is still one of only two hyperscale cloud platforms in the world. The company generates tens of billions in free cash flow every year, enough to fund acquisitions and dividends without stress.
At a forward earnings multiple of 26x, Microsoft trades below its five-year P/E of 34x, according to GuruFocus. Burry doesn’t buy speculative AI trading. You buy a cash machine at a discount on its history.
Burry’s move is not a simple buy-everything-tech call. At the same time he was adding software names, he bought put options on the Invesco QQQ Trust ETF, Nvidia, and the iShares Semiconductor ETF, GuruFocus reported.
That combination means a lot when Burry thinks the market is underpriced. He’s leaning on software names he believes have been unfairly penalized, while at the same time hedging against potential backlash in the most crowded areas of AI trading: semiconductors and the broader Nasdaq.
In plain terms, Burry isn’t saying buy technology more. He says buy the right technology and be careful with the rest.
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A new long position initiated in Microsoft, disclosed by Substack on April 23, 2026, CNBC reported
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Increased positions in MSCI, PayPal, and Adobe alongside the Microsoft acquisition, CNBC noted
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Enter long options on QQQ, Nvidia, and the iShares Semiconductor ETF, according to GuruFocus.
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Microsoft is down about 25% from its July 2025 record high and 13% year to date, 24/7 Wall St. showed.
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Microsoft forward P/E: About 26x, versus a five-year median of 34x, noted GuruFocus
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PayPal is about 37% below peak; Adobe is down about 54% from its high, according to CNBC
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TD Cowen maintained a buy rating on Microsoft with a price target of $540, Invezz reports
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Microsoft’s earnings scheduled for April 29, Motley Fool notes
The quick start to Burry’s post was software sales on April 23. IBM and ServiceNow both delivered earnings guidance that disappointed investors who feared AI would eliminate demand for business software. The market took those signals and sold off software stocks broadly.
Burry’s argument is that not all software companies face the same AI risks. He did intelligence work on Microsoft specifically, and concluded that sales created a buying opportunity rather than a warning signal. His thinking is that Microsoft’s AI strategy, particularly with Copilot and Azure, positions it as a beneficiary of the AI era, rather than a casualty.
That distinction is important because it tells investors that Burry isn’t buying Microsoft despite its AI concerns. He buys it because he thinks the market has confused a single company’s problem with an industry-wide problem.
Burry’s trading is not a recommendation to copy blindly. He did not disclose the size of the position, and his record includes both impressive wins and notable misses. Going after any single investor without doing any independent work is how people get burned.
But the structure of his movement should be studied. You buy quality software assets at discounted rates while protecting the names of fully-fledged AI infrastructure. That combination shows a certain idea: The market was there very generous with chip stocks again very strict with software.
With Microsoft reporting earnings on April 29, the next data point arrives quickly. If the results and directions hold, Burry’s thesis gets its first real test.
If demand for the software is more resilient than IBM and ServiceNow’s reaction suggested, the “bombshell” opportunity he sees for Microsoft could close sooner than the broader market expects.
Related: ‘Big Short’ Michael Burry sends signal on Nvidia stock
This story was originally published by TheStreet on April 25, 2026, where it appeared first in the investing category. Add TheStreet as a favorite source by clicking here.
