Contrarian investors make their reputations by being right when everyone else is wrong. The harder trick is knowing when their own bearishness has run its course. The best of them can flip without flinching.
Few investors carry a heavier bearish reputation than Michael Burry. The Scion Asset Management founder is the man who shorted the housing market before the 2008 crash, the role Christian Bale played in “The Big Short.”
For most of 2026, he has aimed that skepticism squarely at artificial intelligence, stacking put options against Nvidia (NVDA) and a basket of semiconductor and Nasdaq funds while comparing today’s AI mania to the dot-com peak. He has called the leaders of the AI boom overhyped and overfunded, and he has put real money behind the warning.
So it counts as news when the most-watched bear on Wall Street quietly does the opposite. On June 25 Burry disclosed a long, multi-year bullish bet on Microsoft (MSFT), buying December 2028 call options on a stock he says the market has unfairly thrown away.
What Michael Burry actually bought in Microsoft
The position is unusual in its construction. Burry did not simply buy the stock.
He bought December 2028 long-term equity anticipation securities, or LEAP call options, with a strike price in the low $700s, according to Stocktwits. A LEAP is simply a call option dated years out rather than months.
By using options instead of buying shares outright, Burry risks a smaller, defined sum for a far bigger payoff if Microsoft climbs, the kind of asymmetric setup he has favored for years.
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His reasoning was blunt. The “$350 level for Microsoft is a good place to buy,” Burry wrote, calling the longer-dated options cheap next to his outlook, according to TipRanks.
Here is what struck me when I ran the math. Microsoft closed at $365.46 on June 24 and touched a 52-week low of $349.20 the next day. For low-$700s calls to pay off, the stock has to nearly double by December 2028 and clear its October 2025 record close of $538.66 by a wide margin.
That is not a bounce bet. It is a wager that Microsoft prints an all-time high it has never seen, and does it inside about two and a half years.
This is not even Burry’s first move on the stock. He first went long Microsoft in April, when shares were also getting hammered, as TheStreet reported. The June trade escalates that position into a multi-year options structure with far more upside if he is right.
He did more than one thing that day. Burry covered half of his Palantir (PLTR) short at $107.15 while keeping his put options, added to JD.com (JD) and Adobe (ADBE), and sold his Alibaba (BABA) stake for tax-loss reasons, Stocktwits reported.
Microsoft’s AI spending spooked the market in 2026
Microsoft did not fall because the business broke. It fell because the bill came due.
The company is on track to spend roughly $190 billion on capital projects this fiscal year, much of it poured into AI data centers and the memory chips that feed them. A global memory shortage has made that hardware far more expensive.
Investors did the math and balked. Microsoft has shed more than $1 trillion in market value since its October 2025 peak, sliding from a record $538.66 close to roughly $365 and a market cap near $2.6 trillion.
Related: Michael Burry makes a bold call on the SpaceX trade
To put that in human terms, in eight months, Microsoft erased more wealth than the entire market value of all but a handful of companies on the planet, the kind of money that does not just vanish from a chart. It vanishes from 401(k)s, index funds, and the retirement math of millions of people who never intentionally bought a single share.
Most of them own Microsoft anyway, because it sits near the top of the S&P 500 and nearly every target-date fund in America.
The drop was also part of a broader retreat from the most crowded AI trades, as a volatile 2026 market pushed investors out of anything tied to expensive computing power. That is the rotation Burry has been trading against all year.
Here is the scorecard on those bets, and it is mixed:
- Lululemon (LULU): His long position remains underwater, with Finbold reporting the bet down about 45%.
- Nvidia (NVDA): His bearish short has swung back and forth for weeks without a clear winner, Finbold noted.
- Palantir (PLTR): His short has worked, with the stock down more than 33% in 2026, according to Finbold.
- Microsoft (MSFT): The new long, expressed through December 2028 call options, Stocktwits confirmed.
What the Microsoft bet means for your money
The easy read is that Burry flip-flopped. The accurate read is sharper.
When I went back through his 2026 disclosures, the pattern held. Every long he has put on this year is a beaten-down name the crowd abandoned, and every short is a crowded favorite priced for perfection.
Burry is not calling the all-clear on AI. He framed this year’s software selloff as “technical pressure, not fundamental,” according to Stocktwits, meaning forced selling rather than broken businesses.
His Microsoft bet and his still-live Nvidia and Palantir shorts are the same idea wearing two outfits. Buy what fear oversold. Sell what greed overbought.
That distinction matters for your portfolio more than any single ticker. It reframes the question from whether AI is a bubble to which AI-exposed companies got thrown out with the bathwater.
Wall Street, for its part, largely agrees with the bullish side of that trade on Microsoft. The stock carries a strong buy consensus and an average price target of $562.10, roughly 51% above recent levels, according to TipRanks. Stifel’s Brad Reback is the rare holdout, with a hold rating and a trimmed $400 target.
Shares have already started to answer. Microsoft opened 4.09% higher on June 26, the day after Burry’s disclosure surfaced, clawing back much of its recent slide, according to Finbold.
Burry has been early before, and early can look wrong for a long time. His Nvidia and Palantir shorts could still burn him, and a 2028 expiration gives Microsoft plenty of room to disappoint first.
But the trade tells you how the sharpest bear in the market reads this moment. He is betting that the panic swept up at least one company that did not deserve it, and he is willing to wait until 2028 to be proven right.
For anyone who watched Microsoft drop and wondered whether the fear went too far, that is a data point worth sitting with. When the man who shorted the housing market starts buying Big Tech, the contrarian trade might no longer be his claim to fame.
