Michael Burry's Unconventional Picks: Why Bargain-Hunting Value Investing Still Works in a High-Tech World

In a market dominated by AI-driven momentum and speculative fervor, Michael Burry's 2025 investment strategy stands out as a masterclass in contrarian value investing. Despite the prevailing narrative of high-tech euphoria, Burry's Scion Asset Management portfolio reveals a starkly different approach: targeting undervalued stocks across sectors ranging from artificial intelligence to healthcare and consumer credit. By leveraging put options on overhyped tech giants and call options on overlooked fundamentals-driven companies, Burry demonstrates that traditional value investing principles-focusing on intrinsic worth, margin of safety, and asymmetric risk-reward-can still thrive in a high-tech economy.

Betting Against the AI Hype: Palantir and NVIDIA

Burry's Q3 2025 portfolio is heavily concentrated in put options on Palantir Technologies (PLTR) and NVIDIA (NVDA), which together account for 80% of his notional value. While these companies are central to the AI revolution, Burry's bearish stance reflects his skepticism about their valuations. For instance, Palantir's extended depreciation schedules, which stretch capital expenditures over longer periods, artificially inflate earnings and obscure true profitability. Similarly, NVIDIA's dominance in AI infrastructure has led to speculative pricing, with Burry warning that the sector's momentum-driven multiples lack sustainable fundamentals.

This contrarian bet aligns with Burry's historical playbook. During the 2008 housing crisis, he identified a housing bubble by analyzing loan defaults and market sentiment. In 2025, his focus on AI valuations mirrors this approach, targeting overextended metrics while hedging against macroeconomic risks.

Undervalued Gems: Molina Healthcare and SLM Corp

Beyond the tech sector, Burry's portfolio includes call options on Molina Healthcare (MOH) and SLM Corp (SLM), both of which he views as undervalued. Molina Healthcare, a Medicaid-focused managed care provider, trades at a P/E ratio of 8.5–9.5x, significantly below the healthcare industry average of 22–25x. A discounted cash flow (DCF) analysis suggests the stock is trading at a 77.6%–83.5% discount to intrinsic value, projecting a fair value of $649.18–$992.77 per share. Despite challenges like Medicaid funding uncertainties and rising medical costs, Molina has secured new contracts and improved operational efficiency, making it a compelling long-term play.

SLM Corp, a student loan lender, is another standout. With a stock price of $26–$27 and an analyst-derived fair value of $34.73, SLM offers a double-digit upside if federal policy shifts expand its addressable market. Burry's inclusion of SLM reflects his belief in cyclical tailwinds: higher interest rates boost margins, and economic uncertainty drives college enrollment. However, risks like rising delinquency rates and competition remain.

Contrarian Logic in a High-Tech World

Burry's strategy contrasts sharply with traditional high-tech investing, which prioritizes growth metrics over fundamentals. While many investors chase AI and semiconductor stocks for their narrative-driven potential, Burry applies classic value metrics-P/E ratios, free cash flow, and debt-to-equity ratios-to assess intrinsic value. For example, his bearish bets on Palantir and NVIDIA are rooted in concerns about accounting practices and speculative valuations, even as he acknowledges their long-term relevance.

This approach is not without challenges. The high-tech economy's fast-moving innovation and momentum-driven valuations often defy traditional analysis. Yet Burry's success in 2025 underscores the power of patience and contrarian thinking. By focusing on asymmetric risk-reward scenarios-where potential gains outweigh downside risks-he navigates market inefficiencies that others overlook.

Conclusion: The Enduring Power of Value Investing

Michael Burry's 2025 portfolio reaffirms that value investing remains viable, even in a high-tech world. By targeting undervalued stocks like Molina Healthcare and SLM Corp, and hedging against overhyped tech giants, Burry exemplifies how contrarian strategies can capitalize on market mispricings. His approach is a reminder that while narratives drive short-term momentum, fundamentals ultimately determine long-term success. In an era of AI hype and speculative excess, Burry's disciplined focus on margin of safety and asymmetric risk-reward offers a blueprint for investors seeking resilience and returns.