Big Short's Burry Goes Long on Adobe After Betting $1.1bn Against AI Stocks

Michael Burry spent the back end of 2025 telling anyone who would listen that the AI boom was heading for a crash. Then, apparently, he bought Adobe.

Shares in the software company climbed nearly 4% on Tuesday after unconfirmed reports surfaced that Burry, the investor who made $700m betting against the US housing market before the 2008 crash, had taken a long position in Adobe stock. The price touched $270 before settling around $268, per Yahoo Finance. And while nobody has seen a regulatory filing to confirm the trade, the rumour alone was enough to shift the needle on a stock that has been drifting lower for the better part of a year.

Adobe is down roughly 23% since January. Over 12 months, the damage is closer to 42%.
That is a lot of pain for a company generating more than $7bn a year in free cash flow.

Why This Trade Feels Odd

Here is what makes the Adobe move so difficult to square. By late 2025, Burry's disclosed portfolio at Scion Asset Management was almost entirely bearish on AI. Put options against Nvidia and Palantir Technologies accounted for roughly 80% of his holdings, with a combined notional value around $1.1bn.

He deregistered Scion with the SEC on 10 November 2025, telling Bloomberg he was still running his own money but no longer managing outside capital. Then he launched a Substack newsletter called 'Cassandra Unchained' (annual subscription: $379) and started posting detailed breakdowns of why he believed the AI infrastructure buildout was a bubble in the making.

So going long on Adobe, a company whose stock has been pummelled partly because investors fear AI will eat its creative software business, feels like a sharp turn. Or does it?

Mind you, Burry has always been a value investor at heart. The stock trades at roughly 13 times earnings, compared to a five-year average closer to 40 times. Adobe posted record revenue of $23.77bn for fiscal 2025, up 11% year on year. Its own AI product, Firefly, reportedly has 35% of Photoshop subscribers using generative AI features. The fundamentals are not broken. The price is.

Whether Burry sees Adobe as a company unfairly caught in the blast radius of broader AI scepticism, or whether he believes the sell-off has simply overshot, the logic fits his pattern. He buys things other people are running from. He has been doing that for two decades.

The Accounting Argument He Keeps Making

Before the Adobe news broke, Burry had been hammering a different point. In a series of posts on X, he accused the Magnificent Seven tech firms (Microsoft, Meta, Amazon, Alphabet, Oracle and others) of using aggressive depreciation tactics to inflate reported earnings by an average of 24% through 2028. His argument: these companies are stretching the assumed 'useful life' of AI chips and servers on their books, keeping depreciation expenses artificially low and making bottom lines look healthier than they are.

'Now you are engaging in accounting tricks to hide expenses, to protect earnings,' Burry wrote on X. 'You will be tortuously adjusting your earnings in new and sinister ways.'

He estimated that this practice would understate depreciation across the industry by about $176bn between 2026 and 2028. Oracle, he claimed, could be overstating earnings by up to 62%. Amazon by 31%. Meta by 30%. These are not small numbers. CNBC reported the claims but noted it could not independently confirm the practice, and Nvidia declined to comment.

Palantir's CEO Alex Karp was rather less restrained. He called Burry's short position against his company 'bats--- crazy' and 'market manipulation.'

The Senator, The Filing, And Adobe

Burry wasn't the only name attached to Adobe this week. Senator Markwayne Mullin, Republican from Oklahoma, disclosed in a 2 March filing with the SEC that he held up to $50,000 in Adobe stock. The same disclosure showed new stakes in Citigroup and Goldman Sachs, alongside exits from Dell and several other tech names. Mullin bought the shares in early February.

Congressional stock trades always attract attention, fair enough, though the amounts involved here are modest compared to institutional flows.

What Nobody Knows Yet

The size of Burry's Adobe position has not been disclosed. Because Scion is deregistered, the usual 13F filings that let the public track hedge fund holdings no longer apply. Burry said he invests only for himself now.

So the trade, if it happened, is being taken on faith. The market moved anyway. Adobe closed Tuesday at $268, still well below the $421.52 average price target from 27 Wall Street analysts, who give the stock a consensus 'Moderate Buy' rating (13 Buy, 12 Hold, two Sell).

Whether this is the start of something bigger for Adobe, or a one-day pop driven by a famous name and a rumour that could evaporate by Friday, nobody knows. Burry has been right before. He has also been early, which in markets can feel like the same thing as being wrong.
The stock closed up 3.88% on Tuesday. By Wednesday morning, trading was flat.