Michael Burry analyzes tech giants: Why Oracle is the exception

The legendary investor Michael Burry, known from “The Big Short,” has shared his nuanced strategy regarding large technology companies. While he is currently shorting Oracle, he warns against generalized bets against Meta, Alphabet, and Microsoft – not because these companies are flawless, but based on fundamental considerations.

The Core Logic: Business Models Beyond AI

Burry emphasizes a crucial distinction: the stocks of these tech giants are not simply bets on Artificial Intelligence. When betting against these corporations, one must be aware of what they are truly betting on. For Meta, it's about dominance in the social media and advertising market; for Alphabet, it's a diversified ecosystem of search services, Android OS, and future projects like Waymo's autonomous driving. Microsoft, on the other hand, embodies the global standard in productivity software and SaaS solutions.

The Stabilizing Factor

The investor argues that these three companies will face challenges – cost cuts, reduction of excess capacity, potential write-downs on IT assets. However, their fundamental market positions in their respective core areas are not easily dismissed. They benefit from established network effects, high switching costs for customers, and market power that is not easily shaken. Therefore, Burry predicts: “These three companies will not simply collapse.”

Oracle as a Special Case

While Burry is cautious with the Big Three, he sees different fundamental data at Oracle. His decision to short there is apparently based on a specific assessment of this company's business dynamics – an analysis that differs significantly from the situation at Meta, Alphabet, or Microsoft.

Burry's view reflects an important insight for investors: in tech stocks, a granular analysis of individual business segments is crucial. Blindly betting against “Big Tech” is too superficial.