Billionaire investor Michael Burry earned his reputation as a legendary contrarian by betting against the U.S. housing market before the 2008 financial crisis, a prescient call immortalized in The Big Short. He cemented that status last year by wagering heavily against Nvidia (NASDAQ:NVDA | NVDA Price Prediction) and Palantir Technologies (NASDAQ:PLTR) with massive put options — totaling roughly $1.1 billion — right as the AI boom propelled those stocks to new highs.
Now, as fear grips software stocks and decimates valuations across the sector, Burry is once again going against the grain. Reports indicate the “Big Short” investor has made a big purchase of Adobe (NASDAQ:ADBE) stock, bucking the prevailing pessimism.
Rumors Swirl as Burry Stays Silent
At this point, Burry’s supposed stake in Adobe remains pure speculation. He has filed nothing with the SEC disclosing a position, and neither Burry nor his former Scion Asset Management hedge fund (which deregistered late last year) has commented publicly. Still, the chatter has exploded across financial media and social platforms, with Adobe shares jumping nearly 4% on the rumor.
The lack of hard confirmation hasn’t stopped the narrative from taking hold — largely because it aligns perfectly with Burry’s contrarian playbook. After shorting two of AI’s biggest winners — whose stocks have either gone nowhere or declined since he staked his position — shifting to a beaten-down software stalwart like Adobe would represent classic Burry: buying when Wall Street is terrified.
Adobe’s AI Shadow and a Brutal 40% Stock Slide
The skepticism surrounding Adobe is understandable. Investors worry that generative AI tools — many free or low-cost — could erode demand for Adobe’s flagship Creative Cloud suite. Why pay for Photoshop or Premiere Pro when open-source alternatives or rival AI platforms can generate professional-grade images, videos, and designs? That fear has hammered the stock. Adobe shares have tumbled around 40% over the past 12 months, including a 22% drop year-to-date, even as the broader market climbed.
The sell-off intensified despite Adobe’s strong fundamentals, reflecting broader anxiety about AI disruption in creative software. Wall Street has essentially priced in a grim future where Adobe’s moat evaporates overnight.
Building a Contrarian Case
If the reports of Burry’s purchase prove accurate, the move could make compelling sense. Adobe just delivered record fiscal 2025 results, posting $23.77 billion in revenue — an 11% increase year-over-year. The company continues to generate significant free cash flow, delivering nearly $9.85 billion in fiscal 2025, up more than 25% from the prior year. These metrics highlight a business with durable subscription revenue, expanding margins, and successful early integration of AI features like Firefly.
Burry, who has long criticized overhyped AI plays, may see Adobe as the exception: a mature company cautiously embracing the technology without betting the farm on it. At current levels, the stock trades at deeply discounted valuations — roughly 16x trailing P/E, 10x estimates, a fraction of its projected earnings growth rate, and around 11x free cash flow.
Those multiples sit well below historical averages for a high-quality software name, suggesting the market is pricing in an apocalyptic scenario for Adobe’s business.
Key Takeaway
While Burry’s reported transaction may yet turn out to be true, right now it is only speculation. He has made no SEC filing and offered no comment, so investors should not make any investment decisions based on unverified rumors. Do your own diligence. AI risks do abound for stocks like Adobe — and maybe for Adobe as well — as generative tools reshape creative workflows.
Yet the stock also trades at deeply discounted valuations. The market is essentially pricing in the end of the world for Adobe, but Burry presumably doesn’t see that happening. Whether this rumored bet pays off like his housing call remains to be seen, but the contrarian setup is hard to ignore.
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