Burry buys PYPL, ADBE, BABA, VEEV

Michael Burry, founder of Scion Asset Management and the investor who shorted the 2007 housing market — a trade chronicled in The Big Short — published a post on his Substack on June 12, 2026 naming four specific stocks he is actively buying: PayPal (PYPL), Adobe (ADBE), Alibaba (BABA), and Veeva Systems (VEEV). 1 The post is unusually explicit by his standards — Burry typically lets his quarterly 13F filings speak for themselves without editorializing. This time he wrote out the reasoning.

The thesis starts with an observation about where money is going. Burry writes that the market is systematically punishing "the stocks of large, well-established businesses with significant owners earnings, little debt, and large buybacks, which are accretive to intrinsic value per share at current levels." 1

The word "owners earnings" is deliberate — it's the Buffett metric, meaning net income plus depreciation minus capital expenditure required to maintain competitive position. Companies generating owners earnings are, in Burry's reading, getting penalized not because their fundamentals deteriorated but because capital is fleeing toward AI exposure. He says these companies are "not difficult to find at less than 10 times earnings, whether or not they are growing." 1

His read on the mechanism causing this: the market is obsessed with what he calls "extrapolated maximum AI scenarios." And then he said something sharper — "LLMs are language models, not AI. No one is using AI yet." He went further, arguing that LLM training "hits diminishing returns before profitability, let alone return on capital," and that "companies are spending hundreds of billions, even trillions, of dollars on making language models the last search engine one will ever need." 1

The implication is structural: if AI capital expenditure is a bubble distorting relative valuations, then the correction won't come from AI stocks falling in a vacuum — it will come as capital rotates back to companies with tangible cash flows, and the currently depressed multiples on those companies compress upward.

Burry draws the comparison explicitly:

Ross Stores was a discount retailer trading at single-digit earnings multiples in 2000 while the market chased internet companies. Clayton Homes was a manufactured-housing company — unglamorous, high free cash flow, ignored. Dun & Bradstreet provided business credit data, a useful but unsexy product. All three were mature, cash-generating businesses that investors had effectively abandoned at the top of the dot-com bubble. All three recovered sharply after the bubble burst.

The analogy tells you what Burry expects the arc to look like — not a speculative bet that AI fails, but a value bet that the distorting effect of AI enthusiasm on the rest of the market eventually unwinds, leaving behind a cohort of companies that were never cheap for fundamental reasons.

Scion's Q1 2026 13F filing confirmed positions in all four companies. 2 The June 12 post provided the reasoning the filing could not.

PayPal (PYPL) — Burry's comment, as reported by TheStreet citing Seeking Alpha: "Management turnover is hurting the stock as well. Has to look attractive to both PE firms and strategic acquirers." 3 This is a floor argument, not a growth argument. PayPal generated approximately $6 billion in free cash flow in 2025 despite weak stock performance, 3 and new CEO Alex Chriss, who joined in September 2023, is running a margin improvement program. Burry's framing is: the price has been pushed low enough that a strategic buyer or private equity would find it attractive regardless of who wins the payments-industry competitive battle.

Adobe (ADBE) — Burry published a separate Substack Note on June 10 focused specifically on Adobe, writing: "Adobe with new management will have a treasure trove of assets that can be used to train anything Adobe wants to train better than anyone else. Even if this is partially true, the market is underpricing the stock by quite a bit. Price matters." 4 Adobe's Q2 FY2026 results, released on the same evening as Burry's June 12 post, beat on revenue ($6.62 billion, up 13% year-over-year), earnings per share, and annualized recurring revenue ($27.1 billion versus the $26.6 billion estimate), yet the stock fell more than 6% after hours on concerns about a freemium strategy shift and the departure of CFO Dan Durn. 5 Adobe's gross margin sits near 89%, and forward price-to-earnings compressed to approximately 8.8x on the earnings-day drop — a level GuruFocus puts alongside a GF Score of 86 out of 100. 6

Veeva Systems (VEEV) — Veeva is a vertical SaaS provider for the life sciences industry, with net revenue retention consistently above 115% and operating margins near 35%. The stock has been pressured by reduced biotech and pharmaceutical spending and by market concern that Salesforce could compete for a portion of its customer base. Burry's response to that concern, as reported by TheStreet: "The Salesforce threat is only relevant to a small part of its business. The significance has been far overstated." 3 Scion's 13F confirms the Veeva position, which was trading at a forward multiple of approximately 24x as of the filing date.

Alibaba (BABA) — Listed among the four named positions in multiple reports of the June 12 post, and confirmed in the Q1 2026 13F. 2 The freely accessible portion of the Substack post does not contain an Alibaba-specific quote — the individual company commentary appears to be behind the subscriber paywall. Alibaba fits the broader thesis: strong free cash flow, active buybacks, and a stock trading at a significant discount to global software peers.

He normally doesn't. The June 12 post is one of only a handful of times Burry has publicly walked through the reasoning behind specific current positions. TheStreet noted the parallel to a May 9 MercadoLibre post that followed a similar pattern — written near a 13F filing deadline, with unusually specific per-stock commentary. 3

One reading: when Burry documents the reasoning publicly before the 13F drops, it may indicate higher conviction and a shorter expected time horizon than his typical multi-year position. He is not hiding behind ambiguity. He wants the record to show what he thought and when he thought it.

Whether that conviction is vindicated depends on whether he's right that the AI capex cycle is compressing multiples on cash-generating businesses in a way that reverses — and on the timing. In 2000, it took until late 2002 for the Ross Stores trade to pay off. Patience was the variable. He appears prepared for that again.