Michael Burry Goes Long on Adobe Stock
Investor Michael Burry, of "The Big Short" fame, has reportedly taken a long position in Adobe ($ADBE). The move comes as the stock is down 40% from its highs and trading at its cheapest price-to-earnings ratio in five years. Adobe currently generates over $7 billion in free cash flow, suggesting Burry sees it as an undervalued asset.
The investment thesis appears to be a classic value play, a departure from Burry's more recent high-profile short positions against tech darlings. Adobe's stock is trading at a significant discount, with a price-to-earnings ratio around 13, a stark contrast to its five-year average of nearly 40. This comes despite the company posting record revenue of $23.77 billion for fiscal 2025, an 11% increase year-over-year. Concerns over the impact of generative AI on Adobe's core creative software business have contributed to the stock's decline. While revenue growth has slowed to around 10%, the company's net margins have actually improved, rising to 30% in 2025. This suggests disciplined cost management even as research and development for AI initiatives has increased. Adobe is not standing still in the AI race, actively integrating its own generative AI, Firefly, into its product suite. The company is also developing "Adobe GenStudio," a tool aimed at helping marketing teams quickly generate campaign content. The strategy appears to be positioning AI as a complementary tool within its existing ecosystem rather than a replacement. The move is noteworthy given Burry's previous bearish stance on the AI sector. In late 2025, his firm, Scion Asset Management, held significant put options against AI-heavy stocks like Nvidia and Palantir. However, Scion deregistered with the SEC in November 2025, meaning the exact size and timing of this reported Adobe investment are not publicly disclosed.
