The bear who came back from the cold?
Why is 'The Big Short' star Michael Burry loading up on software while everyone else is abandoning ship?
The market might not be buying Michael Burry's story, but Burry has never cared.
The guy who spent $1.1 billion betting that AI is a bubble that will blow up in all our faces, closed his hedge fund and went home, just reappeared out of nowhere.
In one Substack post, he dropped a bomb into the Wall Street puddle:
"I'm buying."
While the entire herd is convinced that AI is about to swallow the software industry whole, Burry is going exactly where the smell of fear is strongest.
"The Big Short" - the updated version?
In November 2025, when the market was in sticky euphoria, Burry filed his quarterly purchases form and made all the traders in the room dizzy.
He held puts (a bet against the stock) worth $912 million on Palantir and another $187 million on Nvidia.
These two positions alone constituted 80% of his portfolio.
Just before that, he had also tweeted a picture of himself as "The Big Short" with the caption:
"Sometimes, we see bubbles."
The timing was almost mystical: Nvidia crossed the $5 trillion valuation mark and Palantir completed a 175% surge in a year.
And then, the bubble burst.
The software sector had a tantrum -
The software ETF ($IGV) plunged 28% from its peak,
Adobe lost over 30%.
and Microsoft dropped 18%, making it a pale shadow of itself alongside Tesla.
The narrative in financial media changed faster than the weather:
"AI is eating software", "ChatGPT is replacing SaaS."
Investors panicked, hit the sell button, and fled the market.
When the pipes get clogged, Burry opens his wallet
He bought: $PYPL $CRM $ADBE $MSCI $FISV $ADSK $VEEV $MSFT
Burry explained why he bought these companies,
His thesis:
This sell-off is technical, not fundamental.
According to him, the market didn't crash because businesses are bad, it crashed because the financial plumbing got clogged.
Private credit currently accounts for about 30% of the leveraged finance market in the United States, and a huge portion of this debt sits with software companies.
As soon as small investors started pulling money from private credit funds, a domino effect began:
Falling prices put pressure on debt, debt pushed prices even lower, creating a loop that burned everything.
The result?
Software stocks are trading at their lowest valuations since 2018.
The sector's forward price-to-earnings multiple collapsed from 40 in July to 21 today, well below the ten-year average of 34.
But the numbers don't lie!
While the narrative screams "death to software", the numbers on the ground tell a story of growth:
Software sector earnings are projected to grow by 16.5% in 2027.
Earnings and revenue forecasts have been revised upwards since February, not downwards.
The market is pricing software as if it's dying, but behind the scenes, its business activity is only accelerating?
Burry chose companies that have one common denominator:
They don't need favors from the private credit market.
PayPal, Adobe, Salesforce, Autodesk, Fiserv, Veeva, and MSCI, all are self-funded and insulated from the financial pressure that crushed the rest.
He also conducted a forensic and competitive analysis and concluded, according to him, that they are not in danger from AI.
The difference between professionals and the herd is simple:
The herd marries a position and a narrative.
Professionals follow the math.
When stocks were too expensive in euphoria, Burry went short; when they are sold at rock-bottom prices due to technical issues while earnings are rising, he buys.
He hasn't changed his mind about AI, he just knows how to identify when the market is punishing the wrong companies.
Most investors let fear and greed hold the wheel for them.
They buy when there's a "good feeling" and sell when they're trembling with fear.
Burry, on the other hand, operates like a machine, without emotion, without narratives, just systematic execution based on dry data.
He might be wrong or ahead of his time, but at least he's not guessing.
The real question -
Is Burry right?