Michael Burry Bets Against 'SaaS Armageddon' with New Software Positions

Michael Burry, the investor famed for predicting the 2008 housing collapse, is challenging the prevailing narrative that artificial intelligence will lead to a 'SaaS armageddon.' In recent communications via his Substack, Burry indicated that the current sell-off in software stocks is overblown and presents a strategic buying opportunity. Burry characterizes the recent decline in software valuations as a 'reflexive positive feedback loop.' He suggests the downward pressure is driven more by shifting market demand for debt and stress within private credit markets—which have significant software exposure—rather than a fundamental obsolescence of the technology caused by AI. Among his new acquisitions, Burry has initiated a position in PayPal (PYPL), which now represents 3.5% of his portfolio. He cited the company's prudent stock-based compensation and a discounted valuation—currently trading at 9.6 times forward earnings—as key drivers for the investment, noting the company's ability to navigate the AI-driven landscape. Additionally, Burry announced plans to enter a position in Salesforce (CRM). The CRM leader has seen its shares drop nearly 30% this year, despite maintaining a dominant market share of approximately 23% to 24% of the global customer relationship management market, serving roughly 90% of the Fortune 500. By targeting companies with massive user networks and significant scale, Burry is betting that these established platforms are too deeply integrated to be easily displaced by AI. This contrarian stance suggests a potential floor for software valuations if other institutional investors begin to view the current dip as a value play.