Michael Burry Buys Microsoft, Sells NVDA Puts... "Software Opportunity"
Burry views the software sector selloff following IBM and ServiceNow earnings shock as an overreaction, initiating new MSFT long position while hedging semiconductors with NVDA and QQQ put options.
- Burry bought Microsoft while shorting Nvidia and QQQ, betting markets overreacted to IBM and ServiceNow earnings
- MSFT trades at 26x forward P/E vs
- its 34x five-year median; April 29 earnings are the first test
"IBM-ServiceNow shock is an overreaction" pushback... Forward P/E at 26x vs 5-year median of 34x shows undervaluation
Big Short's Michael Burry disclosed a new long position in Microsoft (MSFT) through his Substack on April 23 (local time). This came immediately after the software sector plunged following disappointing earnings from IBM and ServiceNow on the same day.
"Software stocks crashed on IBM-ServiceNow earnings that were interpreted as signaling AI threats. I see opportunity in the beaten-down software and payments stocks."
Michael Burry, Substack April 23, 2026
Burry added that he conducted a 'forensic-level analysis' of Microsoft and did not sell any of his existing software holdings.
Microsoft: A Cash Flow Machine Down 25% from Highs
Burry's rationale for targeting Microsoft is clear. The stock is down approximately 25% from its July 2025 all-time high and about 13% year-to-date. However, he believes the underlying business remains intact.
- Azure, Office365, Dynamics — subscription-based recurring revenue model
- Forward P/E ~26x — undervalued vs 5-year median of 34x
- Annual free cash flow — sufficient to fund share buybacks + dividends
- TD Cowen maintains Buy rating with $540 price target
Microsoft's earnings report on April 29 will be the first test of this thesis.
Long Software, Hedge Semiconductors
The key aspect of this portfolio move is Burry's dual positioning. Alongside the Microsoft long, he bought put options on QQQ (Nasdaq-100 ETF), NVDA, and iShares Semiconductor ETF (SOXX).
The message from buying software while shorting semiconductors is clear. Burry believes the market has over-interpreted the IBM-ServiceNow issues as sector-wide problems for software. Meanwhile, he's cautious about correction risks in semiconductors, the most crowded position riding the AI infrastructure wave.
"Buy the right tech, be careful with the rest"
Message from Burry's current positioning
Beyond Microsoft, he also expanded positions in MSCI, PayPal (PYPL), and Adobe (ADBE). PayPal is down approximately 37% from highs, while Adobe is down about 54%.
Data Sources
Michael Burry Substack (as of April 23, 2026), TD Cowen Research, InteliView Editorial analysis.
Frequently Asked Questions
Why did Burry buy Microsoft while shorting Nvidia?
His view is that software is undervalued relative to semiconductors, which have already seen substantial gains during the AI infrastructure investment cycle. The combination of the two positions closely resembles a pair trade designed to capture the relative value of software versus semiconductors.
Why do IBM and ServiceNow's results differ from Microsoft's?
Concerns have emerged that IBM's consulting division and certain ServiceNow subscription services could be displaced by AI. Burry's view is that Microsoft, through Copilot and Azure, is a beneficiary of AI rather than a casualty of it.
What is the size of Burry's position?
It has not been disclosed. His Substack post confirmed only that he entered the positions; the size remains undisclosed.
How will Microsoft's April 29 earnings report affect Burry's thesis?
If Azure growth rates and Copilot demand meet market expectations, it would reinforce Burry's argument that software demand is not being eroded by AI. Conversely, if guidance disappoints, near-term losses on the position would be unavoidable.
Smart Money Briefing
Weekly summaries of Wall Street guru moves and crypto whale activity.
