‘Big Short’ Fame Michael Burry Pitches Bold AI Deal Ideas For Apple, Adobe — And Fires Shots At Tesla CEO Elon Musk

Burry believes Anthropic and Midjourney are excellent targets for Apple and Adobe, respectively.

• Both Apple and Adobe have been laggards in AI, when compared to rivals in their respective industries.
• Anthropic is a good culture fit for the iPhone-maker and is growing rapidly, poised to become cash flow positive soon, according to Burry.
• Adobe's revenue growth has stayed flat, pressuring its stock, as some analysts see rivals like Canva and Figma making a greater push in creative AI.

“The Big Short” investor Michael Burry, who has repeatedly warned that the current AI boom is built on a risky cycle of circular deals, has weighed in on potential opportunities in the red-hot sector that Big Tech companies could pursue.

Late Thursday, Burry said Apple Inc., long viewed as a laggard in the AI race, should buy AI startup Anthropic, whose latest models have unsettled legacy software companies. He also suggested Adobe Inc., whose in-house AI efforts have yet to spark strong investor enthusiasm, should acquire AI image-generation platform Midjourney.

Apple Plus Anthropic?

Apple has stepped up its efforts to boost its AI game in recent months, even though its capital expenditure plans hint otherwise. The company announced a partnership with Google late last year to integrate its Gemini AI technology into upcoming features across Apple devices.

Reports have also suggested Apple is working on a revamped Siri that could function more like a ChatGPT-style chatbot, along with AI-powered smart glasses and wearable devices. Some of these updates are expected to be unveiled at the company’s Worldwide Developers Conference in June.

“Apple should buy Anthropic, good culture fit and Anthropic just starting to race ahead, will be cash flow positive soon. Apple can afford it for now,” Burry wrote on X.

Burry’s nod to Anthropic, currently in the spotlight for its dispute with the Pentagon over the use of AI in defense, underscores the startup’s growing influence. Anthropic’s annualized revenue has reportedly doubled to $19 billion, narrowing the gap with market leader OpenAI, whose annualized sales recently reached $25 billion, according to The Information.

Meanwhile, the rollout of new AI capabilities on Anthropic’s Claude platform, aimed at business automation, legal work, and coding, has triggered a broad sell-off in software stocks over the past two months.

Apple, for its part, held more than $45 billion in cash as of the end of December.

Adobe Needs AI Firepower

For Adobe, Midjourney could be a strategic addition. The privately held, bootstrapped startup gained prominence for producing highly detailed and artistic AI-generated images from simple text prompts, often considered more visually striking than many competing tools.

“Adobe $ADBE should buy Midjourney. And any other small creative software company with a creative founder. @Adobe, you have the cash flow to protect your franchises,” Burry wrote.

Adobe’s quarterly revenue growth has hovered between 10% and 11% over the past three years, prompting some analysts to question whether the company is moving aggressively enough in AI as rivals like Canva and Figma push deeper into the space.

Compared with Apple, Adobe has a longer track record of major acquisitions. Before its planned $20 billion purchase of Figma was scrapped due to regulatory opposition, the company completed several deals worth more than $1 billion, including Frame.io, Macromedia, Marketo, and Omniture.

Adobe held $5.4 billion in cash and cash equivalents as of the end of November. Adobe stock is down 36.2% in the last 12 months, while Apple shares are up 10.7%. On Stocktwits, both stocks had a ‘bearish’ sentiment as of the last reading. 

Burry Targets Tesla Again

Burry also took a potshot at Tesla CEO Elon Musk, reiterating his view that the electric vehicle maker’s shares remain significantly overvalued.

“Elon should sell his Tesla shares and put them in an index fund for his many kids. Tesla shares are 4x overvalued at least. The indices are only 2-3x overvalued,” he wrote on X.

Although Tesla stock has declined about 10% so far this year, it remains the most overvalued company among the “Magnificent Seven,” with a 12-month forward price-to-earnings ratio of 196, according to Koyfin.

Its trailing 12-month P/E ratio is even higher at 375.4, compared with 37.4 for Nvidia, which is currently the world’s most valuable company.

In December, Burry described Tesla as “ridiculously overvalued,” mocking what he sees as the company’s shifting narratives: “the Elon cult was all-in on electric cars until competition showed up, then all-in on autonomous driving until competition showed up, and now is all-in on robots — until competition shows up.”

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