Burry Backs INTU, NOW as AI Fear Is Fully Priced In — Contrarian Setup Emerging

The software sector is in a deep freeze, and the market's fear is now fully priced in. Shares of established players have been hammered, with INTU down 36.6% year-to-date and NOW shares have declined 32%. This sharp sell-off is a direct reaction to fears of disruption from new AI tools, particularly those from Anthropic that overlap with core offerings. The sentiment is overwhelmingly bearish, creating a classic contrarian setup.

Into this gloom steps Michael Burry. The famed investor, known for his contrarian bets, has flagged both Intuit and ServiceNow as "interesting" and "certain" software stocks set for a rebound. His catalyst is simple: he believes the market is at "peak AI threat now". In other words, the worst-case disruption fears have been fully digested by the stock price. His signal is a direct bet against the prevailing pessimism.

Burry's influence often triggers heavy trading, making his call a potential market-moving event. His comments and positions have previously sparked sharp moves, like the recent surge in mortgage stocks. While he didn't elaborate on his specific thesis for these two names or confirm he has taken a position, the mere act of highlighting them against a backdrop of extreme fear sets up a clear expectation gap. The market has priced in severe disruption; Burry is betting that reality will soon prove less threatening.

Assessing the Expectation Gap: Disruption Risk vs. Reality

The market's fear of AI disruption is now the dominant narrative for these stocks, but the tangible business reality tells a more nuanced story. For Intuit, the core risk priced in is that new AI tools will render its accounting and tax software obsolete. Yet the company's own data suggests a moat built on trust and complexity. Consumers and businesses spend approximately seven times more on experts than on software alone to make high-stakes financial decisions. This insight, which has guided Intuit's strategy for years, is the foundation of its "confidence" moat. The company argues it sells not just software, but the combination of powerful technology and embedded human expertise-a network effect that AI alone cannot easily replicate.

This is where the strategic partnerships become critical. Instead of fighting the tide, both Intuit and ServiceNow are actively integrating the disruptive technology. Intuit and Anthropic announced a multi-year partnership to bring custom AI agents to mid-market businesses, while ServiceNow and Anthropic also partnered to integrate Claude models into core workflows. These moves are a direct attempt to reset expectations. By embedding Anthropic's AI into their platforms, they aim to control the customer experience and mitigate the threat of being bypassed. For ServiceNow, the integration is already operational, with the company deploying Claude to over 29,000 employees to boost productivity.

The extreme pessimism is starkly visible in the valuations. Intuit's stock is trading near its 52-week low of $349 after a 120-day drop of 35.26%. This plunge reflects a market that has fully priced in the worst-case disruption scenario. The expectation gap here is wide: the stock price assumes a structural decline, while the company's fundamental strategy and new partnerships suggest a path to integration and continued relevance. The market is betting on AI as a destroyer; Intuit's playbook is to make it a tool. The question for investors is whether the current price adequately discounts the risk of that moat eroding, or if it has already priced in a level of damage that the company's own data and strategic moves suggest is overstated.

The Catalyst: What Would Make the "Buy the Rumor" Thesis Work?

For Burry's contrarian thesis to work, the market's narrative must shift from "AI threat" to "AI integration." The partnership announcements are the first step, but the real catalysts are the tangible results that prove these deals are driving value. The expectation gap will close when investors see evidence that the worst-case disruption scenarios are overblown and that these integrations are becoming operational advantages.

The clearest path is for the partnerships to demonstrate product adoption and operational leverage. For Intuit, the multi-year deal with Anthropic is designed to let mid-market businesses build custom AI agents on its platform. The success of this initiative will hinge on whether those agents are actually deployed and used. If early adopters report improved efficiency or new revenue streams, it would validate the strategy of embedding AI into the workflow rather than being bypassed by it. This would be a direct rebuttal to the fear that AI tools would render Intuit's software obsolete.

ServiceNow provides a more immediate benchmark for success. The company is already using Claude internally to boost engineering productivity, with Claude and Claude Code deployed to more than 29,000 employees. The early results are promising, showing a 95% reduction in seller preparation time. This isn't just a cost-saving gimmick; it's a potential margin catalyst. If this internal productivity gain can be replicated across other departments and scaled to customers, it could feed directly into better-than-expected guidance. A sustained improvement in operational efficiency would reset the market's view of the company's cost structure and growth trajectory.

The market's "whisper number" for these stocks is likely near a bottom, reflecting extreme pessimism. A sustained recovery would require more than just a partnership announcement. It would need a series of positive signals: perhaps a quarter where revenue growth from AI-integrated services outpaces expectations, or a guidance update that reflects the cost savings from internal AI adoption. The catalyst is a shift in the narrative from fear to function. When the market sees that Intuit's domain expertise and ServiceNow's workflow control are becoming the very platforms that govern the AI agents, the "buy the rumor" phase could turn into a "sell the news" rally on the reality.