^{Photo: Bloomberg}

Veteran investor Michael Burry is once again taking a contrarian stance—this time betting on a rebound in software stocks after a sharp AI-driven sell-off rattled the sector. Known for spotting mispriced assets during periods of panic, Burry is now accumulating positions in enterprise software companies that have seen significant declines in 2026.

His latest move signals a clear divergence from the broader market narrative, where concerns about artificial intelligence disrupting traditional software business models have triggered billions in market value losses across the SaaS industry.

Buying Into Weakness Across Software and Payments

Through his latest disclosures and commentary, Burry revealed that he is actively building exposure to several beaten-down names. His portfolio includes holdings in companies such as Adobe, Autodesk, Veeva Systems, and Fiserv, while he is also preparing to initiate positions in Salesforce and MSCI.

One of his more notable moves includes taking a roughly 3.5% stake in PayPal at around $49 per share, highlighting his conviction that the sell-off has created attractive entry points across both software and fintech segments.

This strategy reflects a classic value-investing framework: identifying high-quality businesses temporarily mispriced due to macro or technical disruptions rather than deteriorating fundamentals.

AI Fears Trigger a Broad SaaS Reset

The backdrop to Burry’s buying spree is a sharp correction in software stocks, driven largely by fears that AI could commoditize core enterprise software offerings. The recent downturn wiped out massive valuations across the SaaS sector, with some estimates suggesting trillions of dollars in market value were erased in a matter of weeks.

Investors have grown increasingly concerned that AI agents and low-cost development tools could reduce the competitive moat of traditional software companies. This has led to a rapid repricing of growth expectations, particularly for companies trading at high revenue multiples.

However, Burry appears to view this narrative as overextended.

A Technical Sell-Off, Not a Fundamental Collapse

At the core of Burry’s thesis is the belief that the recent decline was driven more by financial mechanics than by a true shift in business performance. He points to a “reflexive feedback loop” involving private credit markets, where falling equity prices in software companies increased stress on related debt structures, accelerating the sell-off.

According to Burry, many of the companies he is targeting have minimal exposure to these credit risks, meaning their long-term earnings potential remains intact. This disconnect, he argues, has created a temporary mispricing opportunity.

“I do not believe the technical pressures… are big enough to affect these stocks for much longer,” he noted, emphasizing his expectation of a recovery once market conditions stabilize.

Contrarian Positioning Amid AI Skepticism

Burry’s latest moves are consistent with his broader skepticism toward the current AI boom. He has repeatedly warned that the rapid surge in AI investment could resemble previous speculative bubbles, where capital inflows outpace sustainable returns.

While much of the market continues to favor AI-driven growth stories, Burry is effectively rotating into areas that have been left behind—particularly companies with strong cash flows, established customer bases, and proven business models.

This contrarian positioning places him at odds with prevailing sentiment, but it aligns with his historical approach of investing against the crowd during periods of extreme pessimism.

What This Means for Investors

Burry’s entry into software stocks could act as a signal for value-oriented investors who believe the sector has been oversold. While volatility is likely to persist in the short term—especially as AI continues to reshape expectations—the long-term outlook may depend on whether these companies can adapt their business models to the new technological landscape.

If Burry’s thesis proves correct, the current downturn could be remembered not as the beginning of a structural decline, but as a reset that created compelling buying opportunities in high-quality software names.

For now, markets remain divided between those pricing in disruption and those, like Burry, betting on resilience.

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