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Michael Burry just went long Adobe. The same man who bet against the housing market in 2005 and recently held positions against Palantir and Nvidia, now thinks that Adobe is undervalued. Adobe is down 62% from its all-time highs, trading at its cheapest price-to-earnings ratio in 5 years. It's generating over 7 billion in annual net income.
This hasn't been confirmed yet. This buy, there's no public filing, it's just a tweet from Michael Burry's stock tracker on March the 3rd saying Burry went long, but the market reacted. The stock jumped sharply that day just on the rumor alone, and that tells you something about the weight that Burry's name carries.
Adobe reports earnings on March the 12th, that's less than 2 weeks away. If Burry really did buy, we're about to find out potentially why. And guys, I think this rumor that Burry buying is actually true because you go into his official Twitter account called Cassandra un- unchained. He says, "Adobe should buy Midjourney and any other small creative software company with a creative founder.
Adobe, you have the cash flow to protect your franchise." So, yeah, this is one reason why I think the report is actually correct. I do think it's very, very likely that Burry bought. And Burry's basically saying that Adobe, the company, should do what Facebook or Meta did 10 years ago, whatever, and bought Instagram for billion dollars, and now Instagram is worth so much more.
So, Burry's just saying, "You got all this cash, you're making all this money, just buy your competition." Of course, you guys know that I bought bought Adobe a few weeks back, so I've made some nice profit already. So, I guess you could say I'm happy with that, but overall, my bet was just a bet on the underlying business, and I I don't think Adobe's going away anytime soon.
So, there's a bit of price action, but I'm not just celebrating the in the streets now. But yeah, I guess I'm a bit happy. Michael Burry is known for contrarian calls. He looks for assets that the market has given up on, stocks trading at deep discounts, businesses generating cash flow, but hated by investors.
In May 2005, Burry began purchasing credit default swaps on subprime mortgage bonds after analyzing deteriorating underwriting standards in the US housing market. He placed the bet in 2005, he endured years of losses, and was vindicated when the housing market collapsed in 2008. And when he's right, he's normally spectacularly right.
So, recently Burry made headlines for holding put positions against Palantir and Nvidia. The notional value of these positions was a reported at around 1.1 billion in Q3 2025 filings, but Burry himself clarified on X that his actual exposure on the Palantir position was only around 1/100 of that amount.
It was roughly 9.2 million. The 13F filing reports that the notional value of underlying shares, not the premium paid for the puts. Still, the market noticed two of the hottest AI stocks in the market, and Burry was betting against them. But now he's reportedly going long Adobe. That's a complete reversal.
He's not betting against the AI trade anymore, he's buying into a company that the market thinks AI is going to destroy. Adobe is down 62% from its all-time highs of $688, which it hit on November the 19th, 2021. The 52-week high is $453, and the current price is $270 as of March the 3rd. So, that's down $71 year-to-date, representing a 21.49% decline.
The chart shows a steady bleed from early January through to March. The stock has been stuck in a range between $240 and $280 for weeks. The market cap is 106 billion. The P/E ratio is 15.6, and that's the number that really matters. Adobe's 5-year average PE ratio sits somewhere around 40 times earnings.
Right now, it's trading at 15.6. So, that's a massive discount to its historical valuation. So, what broke Adobe? Why is a stock that was once considered untouchable now getting crushed? The narrative is simple. AI is coming for Adobe's creative software empire. Midjourney it generates photorealistic images in just seconds.
OpenAI's Sora creates video from text prompts, the tools that Adobe built its business on. Photoshop, Premiere, Illustrator are facing existential competition from generative AI. Investors looked at this and decided that Adobe was in trouble, the stock got sold off, the valuation collapsed, and now it's sitting at levels that we haven't seen in years.
And that's the setup, a former giant trading at distressed valuations because the market thinks its moat is gone. So, let's break down what's actually happening with Adobe's business because the stock's price tells one story, the fundamentals tells a completely different one. Adobe is generating over $7 billion in annual net income, and that's profit, that's real earnings.
For company trading at $270 with a market cap of $106 billion, that level of profitability at a PE of 15.67 represents a significant discount to both its historical average and the broad where broader software sector. Compare that to the market, the S&P 500 trades at around 25 times earnings depending on the cycle.
Adobe is cheaper than the index, it's cheaper than most large-cap software companies, and it's dramatically cheaper than its own historical valuation. This is exactly the kind of setup Michael Burry looks for. He doesn't buy growth stocks, he doesn't chase momentum, he buys cash-generating businesses trading at discounts because the market is panicking about something.
The panic here is AI, specifically the fear that generative AI tools are going to replace Adobe's creative software. Let's talk about whether this is realistic. Adobe's core products are Photoshop, Illustrator, Premiere Pro, After Effects, and Acrobat. These are tools professionals use every single day.
Graphic designers, video editors, marketers, filmmakers. These aren't casual users by any stretch of the imagination. These are people who pay Adobe between $55 and $69 per month for Creative Cloud subscriptions, depending on whether they choose the standard or the pro plan. So, the argument goes like this.
If you can type prompt into Midjourney and get a finished image, why would you pay for Photoshop? If Sora can generate video from text, why would you need Premiere Pro? It's a compelling argument, but it misses something critical. Adobe isn't standing still. They're building AI into every product that they have.
Adobe Firefly is their own generative AI platform. It's integrated into Photoshop, into Illustrator, and Adobe Express. You can generate images, you can remove backgrounds, you can extend photos, and you can create variations all inside Adobe's tools. They've also added AI features to Premiere Pro for video editing and Acrobat for document workflows.
The question isn't whether AI destroys Adobe, the question is whether Adobe can integrate AI fast enough to stay relevant. Right now, they are doing it. Whether that just That's enough to justify a higher stock price, that's what investors are debating right now. Now, let's talk about the Burry rumor itself.
On March 3rd, a Twitter account called Michael Burry Stock Tracker posted that Burry went long in a in Adobe. The account has a verified checkmark, attracts Burry's filings and portfolio moves. The post said that Adobe is down 40% from its all-time highs, trading at its cheapest PE in 5 years, and generating $7 plus an annual net income.
The stock closed at $270 that day, jumping sharply on the rumor. But, here's the issue. There's no public filing, and there likely won't be one. Here's why. Scion Asset Management filed its last mandatory 13F on November the 3rd, 2025, covering Q3 2025 positions. Shortly after, Burry terminated his SEC registration.
By doing that, he's no longer required to file public 13Fs. And as of February 19th, 2026, after the Q4 filing deadline window passed, no Scion Q4 2025 13F filing appeared. The practical conclusion is clear. Q3 2025 was the public end of Scion's filing era for the public to see. So, if Burry did buy Adobe, we won't see a 13F filing confirming it.
He's not obligated to disclose anymore. The fact that the stock moved anyway shows how much weight Burry's name carries. Investors didn't wait for confirmation, they acted on the rumor. If Burry really did go long Adobe, it fits his playbook perfectly. A hated stock trading at a deep discount to historical valuation, generating massive net income, and it's facing a narrative-driven sell-off that may or may not be justified.
So, that is vintage Burry. The setup is clear. It's a deeply discounted stock. It's a contrarian bet, and earnings in less than 2 weeks.
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