Michael Burry Just Bet Big Microsoft Will More Than Double by 2028

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Artificial intelligence has turned the stock market into a contest over who will own the infrastructure powering the next decade of computing. Investors have poured hundreds of billions of dollars into AI leaders, pushing many technology stocks to lofty valuations. Yet even after Microsoft‘s (NASDAQ:MSFT) stock climbed over the past several years, it’s fallen hard over the past eight months, falling almost 33%. 

One of Wall Street’s best-known contrarian investors believes the market is missing the bigger picture. Michael Burry, whose successful bets against the housing bubble were chronicled in The Big Short, has revealed a new long-term wager that suggests he sees Microsoft’s AI opportunity extending well beyond today’s expectations.

Burry’s Leveraged Bet on Microsoft’s Future

Rather than purchasing Microsoft shares outright, Burry disclosed that he bought December 2028 LEAP call options with strike prices around $700.

LEAPs — Long-Term Equity AnticiPation Securities — are simply long-dated options. In this case, they give Burry the right to purchase 100 Microsoft shares per contract at $700 any time before the options expire in December 2028. The strike price stands far above Microsoft’s recent trading range of roughly $350 to $373, making the options deeply out of the money today.

Here’s what the bet tells investors:

The options don’t become profitable simply because Microsoft reaches $700. Burry must also recover the premium he paid, meaning his breakeven price is roughly the strike plus that premium. If Microsoft finishes below that level, the options could expire worthless.

To put that into perspective, if Microsoft were trading at $900 in late 2028, each option would carry about $200 per share in intrinsic value before accounting for the purchase price of the contract.

Why Options Instead of Buying the Stock?

Burry has said he already views Microsoft around $350 as an attractive entry point. Rather than commit the capital required to purchase shares, he believes these long-dated calls were inexpensive relative to his outlook.

Instead of tying up tens of thousands of dollars buying stock, LEAPs provide leveraged exposure while limiting downside to the premium paid. Granted, leverage cuts both ways. If Microsoft’s shares fail to appreciate enough before expiration, time decay — known as theta — will steadily reduce the options’ value.

The trade also fits Burry’s investing style. He has built his reputation by making concentrated, high-conviction investments when he believes markets have mispriced an opportunity. While he’s often associated with bearish calls, this position is the opposite — a multi-year bullish bet on one of the world’s largest technology companies.

His thesis likely rests on Microsoft’s leadership across several fast-growing businesses, including Azure cloud computing, enterprise software, AI infrastructure, and its partnership with OpenAI.

This Might Not Be an All-In Position

One important detail remains unknown: the size of Burry’s investment. Although he publicly disclosed purchasing the December 2028 LEAPs, he did not reveal how many contracts he owns or how much capital he committed. Because Scion Asset Management no longer files regular Form 13F reports with the Securities and Exchange Commission, investors have no independent way to verify the position’s size.

The trade could actually represent a small speculative position or a major portfolio allocation. Without additional disclosure, nobody outside Burry’s firm knows.

This isn’t the first time Burry expressed bullishness about Microsoft. Earlier this year, he revealed he had gone long on the stock, though he also didn’t reveal any details about his trade. Shares traded at much the same price back then as they do today.

Key Takeaway

In short, Burry’s Microsoft trade sends a clear message even if the dollar amount remains a mystery. He believes Microsoft is undervalued enough that shares could climb well beyond $700 over the next two and a half years, making long-dated call options an attractive way to express that conviction.

That said, most retail investors should resist copying the trade outright. LEAP options can generate outsized returns, but they also can lose 100% of their value if the underlying stock falls short of expectations. Investors who share Burry’s optimism — but prefer a wider margin for error — may find simply owning Microsoft shares offers a more forgiving way to benefit from the company’s expanding AI, cloud, and enterprise software businesses over the long run.

The post Michael Burry Just Bet Big Microsoft Will More Than Double by 2028 appeared first on 24/7 Wall St..