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Home/Markets & Investing/MICHAEL BURRY · WARREN BUFFETT

Michael Burry bets on software stocks as AI fears trigger bear market

RS

Reese St. James

Michael Burry · Apr 16, 2026

Michael Burry bets on software stocks as AI fears trigger bear market

Source: DojiDoji Data Terminal

The iShares Expanded Tech-Software Sector ETF has slumped 28% from its September peak, pushing the software sector into a bear market. Michael Burry believes this decline was driven by a 'reflexive positive feedback loop' between falling equity prices and stress in bank debt tied to software companies.

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Buffett's Cash Hoard and Burry's AI Critique Reveal a Market Setup for Long-Term Winners

Buffett's $373 billion cash hoard is positioned to benefit from the next major market downturn, Paul Dietrich says. The Berkshire Hathaway CEO grew the company's liquid assets to a record level as of December 31, a move that mirrors his 2008-2009 strategy of deploying over $21 billion when credit markets froze. The S&P 500 closed at an all-time high of about 7,023 points on Wednesday, fueled by a sharp rebound in tech stocks. Michael Burry's critique of AI valuations has found an ally in Dietrich, who calls the situation a 'scandal' and agrees with Burry's analysis of inflated earnings and excessive investments in the sector. Dietrich recommends indirect exposure to AI through utilities, which he views as more stable than direct tech investments. He favors domestic energy producers not operating in the Gulf and energy infrastructure, while cautioning against fuel-sensitive industries like airlines and trucking. Dietrich also sees 12 to 24 months of disruption ahead in energy markets, food supply chains, and global growth.

Burry stated in a Substack post that he does not believe technical pressures brought on by private credit and software debt issues will affect these stocks for much longer. He opened a 3.5% position in PayPal and planned to add positions in Salesforce and MSCI. He maintains holdings in Fiserv, Adobe, Autodesk, and Veeva Systems.

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Burry noted that while large language models may seriously affect several companies based on their business models, he has analyzed the companies in selected for investment potential. He specified that none of the companies in his current holdings rely on private credit markets.

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Tokyo Stock Exchange mandates force Japanese firms to prioritize capital efficiency over cash hoarding

Foreign trading volume in Japanese equities hit a record high last year, reaching roughly ten times the level of a decade ago. This surge in volume is the result of a shift in corporate behavior: Japanese companies are prioritizing capital efficiency over the preservation of idle cash. This transition was accelerated by the Tokyo Stock Exchange, which in 2023 called on listed companies to assess their cost of capital and present clear growth strategies. The move forced companies to align with global standards, resulting in increased dividends and share buybacks that supported rising stock prices.

Michael BurryWarren Buffett

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