A "Downgrade Game" investor has invested in Microsoft and cheapened software developers

Michael Burry, the prototypical character from the movie "Downgrade" who predicted the mortgage crisis in the U.S., opened a new position in Microsoft shares and also added to the sagging securities of software developers. The investor said in a post on the Substack platform that in addition to Microsoft, he has increased his positions in MSCI, PayPal and Adobe - securities he only recently began gaining. Burry sees software developer and fintech stocks in payments as oversold, even as the sector remains under pressure due to fears of multiples compression and potential pressure from artificial intelligence.

Microsoft's stock is down about 25% from its July 2025 record, PayPal is about 37% below its peak, and Adobe has collapsed about 54%, CNBC calculated.

"Shares of software developers sold off sharply amid news from IBM and ServiceNow reporting that investors took as a signal of the AI threat," Burry wrote Thursday. - I did not sell shares of software companies."

The financier also signaled that he is increasingly concerned about the broad market after the S&P 500 rallied to all-time highs despite ongoing geopolitical tensions. Burry said he is expanding his bearish bet: put options now make up about 5% of his portfolio. In particular, he took put options on Nvidia shares with a strike of $115, i.e. the right to sell them at that price in case of a stronger fall. Now the chipmaker's securities are worth $208.26. Burry also added a put option on the iShares Semiconductor ETF at a strike of $330 - at a current price of $461.6 - to the iShares Semiconductor ETF.

"The picture is this: we are seeing a historic rally, something the U.S. stock market has never seen before," Burry wrote. - Never before have we seen such a steep, such an inexorable climb to all-time highs. Dizzying times. So while I can't envision the market forming a sharp peak top and collapsing immediately, I did add put options ... while betting on heavily discounted software and payment services stocks.

The investor noted that the iShares Semiconductor ETF is up more than 42% in 17 trading days, as it was at the time of writing the post. Friday, April 25, was the 18th day the fund ended trading in the green. According to Burry, this is "probably the most striking thing": even before the peak of the dot-com bubble in March 2000, growth over such a short period was weaker. And only the rebound from the bottom in October 2002 was stronger, but then it followed an 80% collapse. Therefore, the current spurt, in the investor's opinion, has become the most powerful in the history of the semiconductor index.

This article was AI-translated and verified by a human editor