The entire market is chasing AI, while "big short" Burry is going against the trend and buying low: Adobe, Alibaba, and four other stocks are favored.

Amid the frenzy of AI in the US stock market and the structural bull market led by the "Seven Sisters" continuing for nearly a year and a half, a "contrarian flag bearer" famous for accurately capturing extreme market mispricing is sending out a completely different signal. The protg of the movie "The Big Short", founder of Scion Asset Management, Michael Burry, released a sharply phrased market diagnosis on social media on Friday. He bluntly pointed out that the US stock market is currently in a profound misalignment - large, well-established, high-earning, low-debt, blue-chip companies engaging in large-scale stock buybacks at low valuation levels are suffering systemic market punishment, with the culprit being the disorderly siphoning and extreme scenario extrapolation of AI capital. What is the market punishing? Burry's thesis is based on a value judgment that is completely contrary to the current market narrative. While mainstream funds on Wall Street are focused on the AI computing power and capital expenditure race, industry giants traditionally seen as "cash cows" are experiencing continued valuation compression. In Burry's view, the fundamentals of these companies have not deteriorated - profit margins are still near all-time highs, debt structures are healthy, and shareholder return strategies are active. However, in the face of AI-driven capital flows, these characteristics have become "non-hotspot" labels. Burry commented earlier this week that AI investments are showing signs of excessive resource concentration, and excessive capital expenditure could lead to a scenario similar to the bursting of the internet bubble. This is not Burry's first expression of caution about the AI bubble. Since late 2025, Scion Asset Management has continuously disclosed bearish options positions against NVIDIA Corporation and Palantir, with about 80% of the fund concentrated on shorting these two AI star stocks. As he increased his traditional value positions over the weekend, this "long-short hedge" risk exposure became even more asymmetric. Increase holdings in four "deep value" targets: Logic and Data The four stocks that Burry chose to increase his position against the trend - Adobe (ADBE.US), Alibaba Group Holding Limited Sponsored ADR (BABA.US), PayPal (PYPL.US), and Veeva Systems (VEEV.US) - all have a consistent investment logic behind them: buying undervalued assets with high-quality fundamentals supported by market obsession with AI narratives and pricing discrepancies generated by short-term disturbances in companies. Here are the specific holding logic and the latest market information for the four stocks: Adobe: "Irrational collapse" under performance exceeding expectations Burry's core reason for increasing his holdings in Adobe is that the market's collective reaction to the unexpected negative news of the CFO leaving and technical selling was overblown, while the company's fundamentals were actually at their best stage in recent years. He believes that Adobe's profit margin is near all-time highs, yet its stock price has been mistakenly influenced in the irrational outflow of AI capital. The key discrepancy lies in the fact that Adobe's second-quarter earnings for the 2026 fiscal year (ending in May) actually exceeded market expectations: revenue of $6.2 billion, a year-on-year increase of 12.7%, achieving the highest growth since the second quarter of the 2022 fiscal year; earnings per share (non-GAAP) also saw a year-on-year increase. However, after the financial report was released, the company's stock price fell by 6.76% to $204.02 at the close on Friday, with a market value of approximately $82.465 billion, and a TTM P/E ratio of about 11.67 times. The surface catalyst for the market sell-off was the announcement of the CFO's resignation on the same day as the financial report release, coupled with overall pressure on the software sector. However, in Burry's valuation system, this level of short-term disturbance actually provides a window to buy high-quality assets at a deep discount - a software leader with revenue growth back in double digits, ample free cash flow, and the commercialization of its AI tool (Firefly series) still in progress, trading at a P/E ratio of less than 12 times, which is clearly disconnected from its intrinsic value. Alibaba Group Holding Limited Sponsored ADR: The most advanced AI company in China is overlooked by the market Burry's assessment of Alibaba Group Holding Limited Sponsored ADR is particularly straightforward: "In terms of AI strategy, it is the most advanced company in China, and has been buying back stocks. Even though the market has not responded positively to this recently, the company's value continues to increase, benefiting ordinary shareholders." Burry had completely cleared Chinese tech stocks from his 13F holdings earlier, but then quickly increased his positions in Alibaba Group Holding Limited Sponsored ADR and JD.com, Inc. Sponsored ADR Class A, among others. As of the close on June 12th, Alibaba Group Holding Limited Sponsored ADR was trading at $112.82, with a 52-week high of $192.67, a TTM P/E ratio of about 17 times, and a total market value of approximately $270.67 billion. Burry's logic for holding Alibaba Group Holding Limited Sponsored ADR includes: first, its Alipay Thousand Questions Large Model is leading in the registration and commercialization of large models in China; second, Alibaba Group Holding Limited Sponsored ADR's continued large-scale stock buybacks are significantly increasing intrinsic value per share; third, the current stock price is far below recent highs, as market pessimism about macroeconomic factors completely masks the company's value in AI infrastructure development. PayPal: 7-8 times P/E ratio combined with large-scale buybacks Among Burry's increased positions, PayPal's valuation compression is the most extreme. As of the close on June 12th, PayPal was trading at $41.53, with a P/E ratio of only about 7.79 times, a market value of approximately $36.634 billion, and a 52-week range of $39.90 to $78.22. "At this price, a 7-8 times P/E ratio with a large number of stock buybacks is highly attractive to private equity firms and strategic acquirers," Burry wrote on social media. PayPal has undergone management changes and business strategy adjustments over the past two years, with the market continuously watching for its "ultimate performance" but has yet to see a breakthrough. With the new management team gradually clarifying the product roadmap and profitability remaining robust (earnings per share of about $5.38), Burry's assessment is that the market's pessimistic expectations are already fully reflected in the valuation, and any positive catalysts at the strategic level could trigger a valuation correction. Veeva Systems: Threating Salesforce, Inc.(CRM.US) is severely overestimated Veeva Systems is a software company providing cloud solutions for the life sciences industry. As of the close on June 12th, the stock price was $159.54, with a TTM P/E ratio of about 28.29 times, a market value of approximately $25.916 billion. The company's fourth-quarter revenue for the 2025 fiscal year was $836 million, with TTM revenue reaching $3.19 billion, maintaining steady growth. Burry believes that Veeva's stock price has fallen to a low point, with both P/E ratio and P/S ratio significantly below historical levels. "The threat from Salesforce, Inc. is only related to a small part of its business, and its importance has been severely exaggerated," he countered the market's long-standing concerns about Salesforce, Inc. potentially eroding Veeva's market share.