Michael Burry Warns SaaS Firms Are Downplaying AI Revenue Risks — ‘We Are Still Very Early’

• Burry said Anthropic’s AI agents intensified pressure on software stocks by threatening traditional SaaS workflows.
• He said that investors are increasingly driven by AI narratives and momentum trades rather than a deep understanding of the underlying businesses they own.
• Burry grouped software companies into five AI-risk categories ranging from “Fortress” to “Wood.”

Michael Burry on Friday warned that software-as-a-service companies are downplaying the risks artificial intelligence poses to their revenue models.

In his Substack post, Burry said AI-related stress was already visible in private markets, citing S&P Global Market Intelligence data showing a surge in bankruptcy filings among private software and IT firms during the third quarter (Q3) of 2025.

“Throughout my study of this space, it has become very clear that we are still very early. Almost no software company is admitting that they are losing revenue to AI. Yet they almost all say they are internally seeing huge efficiencies and cost savings from AI,” Burry said.

Burry Warns Of ‘SaaSpocalypse’

Burry said the term “SaaSpocalypse” has increasingly been used to describe the selloff across software stocks as investors reassess the risks AI poses to traditional SaaS business models.

He noted that companies including Salesforce, HubSpot, Snowflake, Workday and ServiceNow saw sharp declines entering 2026, with pressure intensifying after Anthropic launched Agentic AI plug-ins that allowed Claude models to directly interact with enterprise software.

Burry highlighted that the S&P 500 Software & Services index fell 17% over the six trading days following Anthropic’s launch of agentic AI plugins.

“Anthropic’s agents were suddenly coming for every software seat and every software function,” Burry stated, arguing that investors are beginning to realize AI agents could eventually replace large portions of enterprise software workflows.

“Today, as for any disaster tourist, the idea is to look for signs of value, any reason to be bullish. For me, that starts with fundamental analysis and building up a valuation,” he added.

Burry Believes Investors Still Don’t Fully Get It

Burry said the broader market continues to hit record highs even as many formerly high-flying software companies face what he described as a “bloodbath.”

“Easy narratives get taken far too far these days because 95% of investors likely have no idea what they really own. Let me re-phrase that. 95% of investors like to have no real idea of what they own,” he said.

He said that investors are increasingly driven by AI narratives and momentum rather than a deep understanding of the businesses they own.

Burry Separates ‘Fortress’ Software Firms From Vulnerable Ones

Burry said software companies face varying levels of AI-related disruption risk depending on the strength of their competitive moats, pricing models, and internal AI capabilities.

He grouped software companies into five categories based on their exposure to AI disruption: Fortress, Castle, Chapel, Stone, and Wood.

Burry said “Fortress” and “Castle” firms have strong competitive moats, embedded enterprise infrastructure, and meaningful in-house AI capabilities, while “Chapel” and “Stone” companies face growing AI threats despite some internal R&D efforts.

Burry added that “Wood” companies are the most vulnerable because they rely heavily on third-party AI tools and lack meaningful internal AI development.

Burry’s Puts On NVDA, QQQ, SOXX

Burry stated earlier this week that he has added to his Nvidia January 2027 puts at a strike price of $115 and March 2027 puts at a strike price of $125.

He also added to his QQQ puts for January 2027 at a strike price of $550, while loading up on SOXX short for January 2027 at a strike price of $330.

At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, fell 0.92%, while the Invesco QQQ Trust ETF (QQQ) declined 1.25%.

The iShares Expanded Tech-Software Sector ETF (IGV) is down 13% over the past 12 months, while the iShares U.S. Technology ETF (IYW) is up 50%.

Also See: Datavault Q1 Revenue Soars 443%  – CEO Touts Rising Institutional Tokenization Demand

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