In early Friday trading (Beijing time), all three major U.S. indices closed lower. The Dow Jones fell 179 points (-0.36%) to 49,310, the S&P 500 dropped 29 points (-0.41%) to 7,108, and the Nasdaq declined 219 points (-0.89%) to 24,438.

ServiceNow’s nearly 18% drop was driven by a lowered full-year subscription margin outlook and the company’s acknowledgment that Middle East tensions are slowing government deal conversions. IBM fell more than 8%; although its earnings met expectations, software growth only matched forecasts and consulting revenue showed almost no growth in constant currency terms, reigniting fears that AI could disrupt traditional IT services.

Microsoft fell nearly 4%, Oracle declined about 6%, Palantir dropped 7%, and Adobe slid more than 6%. Overall, the S&P 500 Software & Services Index fell over 5% in a single session — its worst performance since January 29.

Against this backdrop, Michael Burry revealed that he bought Microsoft shares and increased holdings in MSCI, PayPal, and Adobe on the same day, expanding his long exposure to software stocks.

More notably, he simultaneously built a hedged position by purchasing put options on the Invesco QQQ Trust ETF (expiring in early 2027), as well as puts on Nvidia and the iShares Semiconductor ETF.

This dual positioning — long software, short broader tech and semiconductors — reflects a carefully structured strategy. The logic is straightforward: software stocks may have been oversold, but the broader technology sector and chip industry could still face downside risk.

A closer look at Burry’s picks highlights the rationale behind his moves.

Microsoft remains one of the clearest beneficiaries of AI monetization through Azure. Citi maintains a Buy rating with a $600 price target, while Guggenheim has a target of $586. Both reaffirmed bullish views in recent reports. Microsoft’s current price-to-earnings ratio is around 26x, well below its five-year median of 34x, making it relatively attractive for a company of its scale.

Adobe has fallen nearly 60% from its 2024 peak and is down about 29% year-to-date in 2026. On April 21, it announced a $25 billion share buyback program — roughly a quarter of its market capitalization — signaling strong confidence in its cash flow. In its latest quarter, operating cash flow reached a record $2.96 billion, with revenue growing 12% year-over-year.

While investors worry that AI tools could erode Adobe’s creative software moat, its Firefly AI model has already generated more than 22 billion assets and holds around 29% market share in AI design tools, suggesting monetization is gaining traction.

As for PayPal and MSCI, the former remains a cash-generating business in digital payments that many view as undervalued, while the latter benefits from the continued growth of passive investing globally. Together with Microsoft and Adobe, these holdings represent companies whose fundamentals remain intact despite negative market sentiment.

His strategy reflects a nuanced view of the market — selectively bullish on high-quality software names, while maintaining a cautious stance on the broader tech ecosystem.