While global markets continue to chase artificial intelligence-linked stocks, famed investor Michael Burry is quietly building positions in companies that have fallen out of favour amid the AI frenzy.
In a May 19 post on Substack, Burry revealed fresh bets on PayPal, Adobe, MercadoLibre, Lululemon and Zoetis, companies he believes are being unfairly punished as investor capital floods into AI-driven trades.
“These stocks are part of the mass whale fall happening away from the main spectacle,” Burry wrote, using a phrase that has drawn attention across financial markets.
The “whale fall” reference comes from marine biology, where the carcass of a whale sinks to the ocean floor and sustains smaller ecosystems long after larger predators move on.
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Burry appears to be comparing neglected non-AI stocks to overlooked opportunities feeding long-term investors while the broader market remains fixated on AI.
According to CNBC, Burry described MercadoLibre as a clean long-term winner after adding to the stock in the mid-$1,500 range. He also disclosed purchases of Adobe in the low $250s and termed PayPal a complete position, signalling strong conviction in the payments company despite persistent market scepticism.
PayPal shares are down 23.9% year-to-date, according to IBTimes UK, amid concerns over rising competition from Apple Pay, Block and Stripe. Adobe has fallen 26.9%, while Lululemon has slumped 42.1% this year as investors rotated away from companies lacking a strong AI narrative.
Burry's latest comments also carried a broader market warning. Drawing parallels with the dot-com bubble of the late 1990s, the Scion Asset Management founder argued that the current concentration of capital into AI-related stocks is creating distortions elsewhere in the market.
According to CNBC, Burry believes investors are abandoning fundamentally strong businesses simply because they are not directly tied to artificial intelligence. His strategy, therefore, is centred on buying durable companies that have become deeply discounted during the AI boom.
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Scion Asset Management currently holds only nine positions, according to the firm's Q1 2026 13F filings, reflecting Burry's long-standing preference for concentrated, high-conviction bets over broad diversification.
The core of Burry's thesis is not necessarily that AI will fail, but that excessive enthusiasm around the sector may be causing investors to overlook quality businesses with long-term earnings potential. If market leadership eventually broadens beyond AI, Burry's so-called “whale fall” trades could benefit from a sharp rotation back into neglected sectors.
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