Michael Burry Goes Long Adobe
Michael Burry went long Adobe ($ADBE), now down 40% from highs at its cheapest P/E in 5 years with $7B+ annual free cash flow. This comes after he shorted PLTR and NVDA earlier. Adobe is trading at historically low valuations despite strong fundamentals.
Michael Burry's reported investment in Adobe follows the November 2025 deregistration of his hedge fund, Scion Asset Management, with the SEC. This move means he is no longer required to publicly disclose his holdings through quarterly 13F filings, making the Adobe purchase an unconfirmed rumor that gained traction on March 3, 2026. After deregistering his fund, Burry launched a paid Substack newsletter called "Cassandra Unchained" to share his investment analysis. The rumored Adobe stake represents a potential shift from Burry's recent high-profile bets against the artificial intelligence sector. In late 2025, his portfolio was heavily weighted with put options against AI darlings Nvidia and Palantir, with a combined notional value of approximately $1.1 billion. This bearish stance on AI was a central theme in his initial newsletter posts, where he drew parallels to the dot-com bubble. Adobe's stock has been trading at a historically low price-to-earnings (P/E) ratio, its lowest in five years. As of early March 2026, Adobe's P/E ratio was approximately 15.3 to 16.35, a significant drop from its five-year average of around 40. This decline of over 40% from its peak is largely attributed to market fears that generative AI tools could disrupt its core creative software business. Despite the stock's performance, Adobe's underlying business has shown strong fundamentals. The company reported a record revenue of $23.8 billion for fiscal year 2025, an increase of 10.5% year-over-year, with a net income of $7.1 billion. The company has also been integrating its own AI, Firefly, into its product suite. The reports of Burry's investment, though unverified, caused a 3.88% rally in Adobe's stock on March 3, 2026. The move would align with Burry's classic contrarian strategy of investing in undervalued companies that are out of favor with the broader market. Analysts' consensus price targets for Adobe stock suggest a potential upside, with an average target price significantly higher than its early March 2026 trading price.
