An investor from The Big Short is holding Adobe in the AI era. Which seven stocks is he avoiding?

Adobe took one of the top spots in a ranking of companies from the software and payments sector by Game of Thrones investor Michael Burry. He believes the market's main fear that generative AI will drive Adobe products out of the creative process is exaggerated. Burry, on the other hand, put CrowdStrike in last place. He's convinced that the market is valuing the company too highly.

In his blog Cassandra Unchained, the investor has developed his own system for analyzing companies - through the impact of AI on their business model and stock valuation. In the first installment, Burry wrote about office software stocks, and now he's looking at productivity and cybersecurity services.

Burry evaluates companies from the perspective of how much return investors actually receive after employee stock compensation, buybacks, debt load and future liabilities - and whether the current price is in line with this. To do this, he introduces the IV15 ratio: a benchmark for a 15% annualized return over a 15-year or longer horizon. If a security is trading above this benchmark, even a strong drop from the peak for it does not create a sufficient margin of return.

Burry also examines whether demand for a company's products will continue where AI can do the work. He ranks companies that have protection against the risk of being replaced higher in his ranking. Burry parses cybersecurity through another effect of AI: autonomous models find vulnerabilities faster and make attacks more difficult, so demand for defense solutions is growing. In his breakdown, the investor estimates how much the market is already paying for this growth.

Burry evaluates 50 companies from the software and payments sector in a single ranking, so the papers in the second note are ranked not in a row, but according to their position among the entire software and payments sector.

Adobe | 2nd place

Because of fears that AI could disrupt Adobe's business model, the market has lowered the company's valuation: according to Burry, the stock is near seven-year lows and the price/earnings multiple is at 14-year lows.

Burry disagrees with the market's view: he believes AI will not replace human talent. In addition, big brands need licensed content and control over how it is used. This is Adobe's advantage: its services are used by 99 Fortune 100 companies, with a monthly audience of more than 850 million users. Burry believes the company is in the zone of an attractive opportunity - and holds a full position on it. In April, Burry wrote that about 20% of his portfolio is allocated to Adobe and three other stocks.

Autodesk | 22nd place

Autodesk is vulnerable to AI, Burry says: If agents speed up design, companies may need fewer subscriptions to the company's products. But right now, Burry writes, Autodesk is supported by solid revenue growth, demand from data center construction, and an industrial order book. That's why he doesn't expect a rapid downward revaluation of the stock.

That said, Autodesk stock is still too expensive, according to Burry's calculations. Even with a steady revenue growth of about 15%, the paper does not give the necessary margin of return. Burry wrote that he used to own Autodesk stock, but that's not relevant now.

Intuit | 24th place.

Artificial intelligence won't be able to replace Intuit's products, Burry believes: in financial management, accounting and tax preparation, companies want to pay for certainty in calculations and reporting.

Intuit's proprietary AI tools are strengthening the position: in January 2026, the accounting agent processed more than 237 million transactions; the tax agent found customers more than $1,000 worth of additional deductions on average. But Intuit stock, Burry calculates, is still too expensive to buy - he's not buying it himself. The company spent $11.6 billion on buybacks versus about $9.2 billion on employee stock awards, but it was buying paper at high prices - so those buybacks don't change the investment picture.

Unity | 35th place

Video game developer Unity has about 70% of the mobile game creation software market, and about half of all video games use its technology. This gives the company a base on which it is trying to rebuild its business to make money not only on tools for developers, but also on advertising in the gaming environment.

Burry sees the problem as a weak story for shareholders: over six years, Unity has accumulated a reported loss of about $3.63 billion, and employee stock payouts totaled $2.66 billion. The last quarter showed improvement - revenue grew 17%, and the share of stock payouts fell to 15% of revenue - but Burry doesn't think it's enough yet: he doesn't own Unity stock and is waiting for a lower price.

Zscaler 38th place.

Zscaler, which works in information security, is benefiting from the growth of AI threats: orders for the company's solutions have exceeded $100 million in the past year, and the company's quarterly revenue reached $850 million. But that doesn't provide enough of a return to shareholders, Burry writes: employee stock-based compensation makes up about a quarter of revenue, and the investor estimates the profit attributable to shareholders at about minus $200 million.

Burry sees a separate risk in Zscaler's architecture: multiple customers' traffic flows through a single cloud platform. Burry believes this makes the company vulnerable: if the platform is attacked, many customers could be affected. The investor does not hold its shares in his portfolio.

Palo Alto Networks | 40th place

Palo Alto Networks, a provider of information security services, is betting on platformization: customers are connecting several of the company's solutions at once. Burry writes that spending by such customers is growing by nearly 20%, and their number has increased by 35%.

But at the same time, the Palo Alto Networks platform itself is being completed through expensive purchases: for example, the purchase of cybersecurity company CyberArk cost Palo Alto Networks $25 billion. Such deals require large investments, but do not have an effect on shareholders. Taking into account payments to employees in shares, the owners' profit, according to Burry's calculations, remains negative - about minus $700 million on revenues of about $11.3 billion. The investor writes that dilution of shares and their overvaluation keep him from buying.

DocuSign | 47th place.

Cloud platform DocuSign is trying to move beyond electronic signatures with a new direction - a system for handling the contract at all stages of Intelligent Agreement Management. In 18 months, IAM has brought in more than $350 million in annual recurring revenue; the system already stores 200 million agreements. But Burry believes the new platform has yet to prove it can change the economics of business.

DocuSign stock has lost about 85% from its 2021 peak, but still stands above the level at which Burry expects the right returns. The company's cash flow also looks weaker than the reported figure: the company claims about $1 billion in free cash flow, but more than $600 million in employee stock-based compensation. So a $2.6 billion buyback at that price, Burry estimates, doesn't improve shareholder value. The market is overvaluing DocuSign, says an investor who doesn't own shares in the company.

CrowdStrike | 50th place

CrowdStrike's core business hinges on its Falcon cloud-based defense platform, which Burry attributes the main technology risk to. The model is built on a common base: this helps defenses scale quickly, but makes failure within the system particularly painful. In July 2024, a faulty CrowdStrike update knocked out 8-9 million devices worldwide.

On the financial side, CrowdStrike looks the worst in the rankings, Burry writes. With revenue of about $4.93 billion, he estimates shareholder returns at about minus $1.4 billion. Employee compensation accounts for 22.2% of revenue, the share count is up about 25% over five years, and the stock is trading at more than 23 times the level that would give an investor the yield he wants. Burry does not own CrowdStrike and writes that he was considering a short position in it.

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