Michael ‘Big Short’ Burry Leans Into ‘Bombed Out’ MSFT, PYPL, ADBE Stocks While Shorting Chip Rally

• Burry started a position in MSFT and purchased GME shares for a second straight day.
• ServiceNow and IBM stocks suffered sharp declines on Thursday, following their results; iShares Expanded Tech Software ETF (IGV) declined 5.8%.
• Burry bought put options on QQQ, NVDA, and SOXX that expire early next year.

Ace investor Michael Burry on Thursday disclosed a new position in Microsoft Corp., while adding to holdings in Adobe Inc., PayPal Holdings Inc., and stock market indices operator MSCI, Inc. He also signaled a bearish view on chipmakers, betting the AI-fueled rally in semiconductor stocks will cool by early 2027. 

Burry bought GameStop stock for a second consecutive day, after a reportedly $6.4 million purchase on Wednesday.

Major tech stocks fell on Thursday, triggered by sharp declines in ServiceNow and International Business Machines following their results, as well as Big Tech players Microsoft and Meta Platforms.

ServiceNow flagged a hit to its business from the ongoing war in the Middle East last quarter and issued a softer outlook for full-year subscription gross margins, fueling investor concerns that the impact could show up in upcoming earnings across other software and tech companies.

IBM's stock slumped 8.3% after the company disappointed investors by keeping its revenue guidance unchanged.

The iShares Expanded Tech Software ETF (IGV), which tracks software stocks and is considered the sector benchmark, suffered its largest one-day percentage decline since April 2025. The Invesco QQQ Trust Series 1 (QQQ), which tracks Nasdaq-100 stocks, declined 0.6%.

Microsoft's stock closed 4% lower after the company announced it would offer voluntary buyouts to 7% of its workforce. Shares of Meta slid 2.3% after the company said it would lay off roughly 8,000 people.

A clear divergence is taking shape in tech trades, with SaaS stocks sliding while semiconductor names continue to surge. Intel, for instance, had rallied about 80% this year before its upbeat results pushed the stock even higher in the post-market Thursday trading.

The iShares Semiconductor ETF (SOXX) is heading for its best month on record. 

Burry said he is leaning into “bombed out software and payment stocks,” but expects the AI-driven rally in the other parts of the market to cool off.

Burry said he purchased January 2027 put options on the Invesco QQQ Trust with a $550 strike, along with March 2027 puts on the QQQ with a $525 strike. He also bought January 2027 puts on Nvidia at a $115 strike and initiated a new position in January 2027 puts on the SOXX semiconductor index at a $330 strike.

“The picture is one of an historic rally, something that has never happened in the U.S. stock market. Never have we seen an ascent this steep, this unrelenting, and to all-time highs.” - Burry

“Never have we seen an ascent this steep, this unrelenting, and to all-time highs,” Burry said about the chip rally, noting milestones such as the iShares Semiconductor’s 17-day gains streak and a 43% gap from its 200-day moving average.

Beyond semiconductors, there is strong momentum in companies supplying electronic components, optical components, and other data center infrastructure, Burry said.

CNBC’s Jim Cramer supported Burry’s view and said that cybersecurity stocks in particular are attractive. “IGV brings down Oracle, MSFT, Palantir, Salesforce, Palo Alto, Applovin, Crowdstrike Adobe, Intuit, ServiceNow --all because of ServiceNow and its margin compression... Cyber stocks should not be sold; they are the buys today,” Cramer said on X.

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