Michael Burry Just Made a HUGE move on Microsoft!

Burry’s Move and Why it Matters

The significance of the $700 strike is that Microsoft would need to roughly double from current levels around $350 for the calls to be in the money at expiration. Burry was explicit about his thinking: he said $350 was a fine price for the shares outright, meaning he views the stock as attractively valued at current levels on a fundamental basis. But the LEAP calls were, in his words, too inexpensive to leave on the table. What he is saying is that the option market was not adequately pricing in the probability of Microsoft doubling over two and a half years — and when an intelligent investor identifies that kind of mispricing between an option's cost and the realistic probability of the underlying outcome, buying calls rather than shares dramatically amplifies the return if the thesis plays out. It is a calculated bet on an asset he already believes is undervalued, structured to maximize the payoff if he is right.

It is also worth noting this is not Burry's first Microsoft position, he already owns shares. Ackman's Pershing Square initiated a Microsoft position earlier this year at approximately 21 times forward earnings. Burry is now expressing the same underlying conviction through a different instrument. When two of the most respected investors in the world are independently arriving at the same thesis on the same company, it is worth paying serious attention to why.

Microsoft as a Business

Microsoft is one of the two or three finest enterprise technology franchises ever built. The company operates two dominant platforms that together account for approximately 70% of its profits. The first is Microsoft 365 — the productivity suite used by over 450 million knowledge workers daily through Word, Excel, PowerPoint, Outlook, and Teams. M365 is not a product that competes on features. It is the operating system of the modern enterprise, woven into the identity, security, compliance, and data governance infrastructure of virtually every large organization on earth. The switching cost is not a number you can calculate — it is effectively infinite for most large companies. The second platform is Azure, the world's second largest cloud hyperscaler, which is now the primary infrastructure layer for enterprise AI workloads globally. Beyond these two core franchises, Microsoft owns LinkedIn with 1.3 billion members, the Xbox and Activision Blizzard gaming business, and approximately a 27% economic interest in OpenAI — worth roughly $200 billion at the most recent funding round valuation.

The Most Recent Earnings: FY2026 Q3

Microsoft's fiscal third quarter results for the period ending March 31, 2026 were exceptional across every metric that matters. Total revenue came in at $82.9 billion, up 18% year over year. Operating income grew 20% to $38.4 billion. Net income increased 23% to $31.8 billion. Diluted earnings per share of $4.27 beat expectations and grew 23%. These are not the numbers of a business in transition — they are the numbers of a business accelerating.

The most important headline inside the report was Satya Nadella's disclosure that Microsoft's AI business has now surpassed an annual revenue run rate of $37 billion, up 123% year over year. That is not a rounding error. That is one of the fastest-growing revenue streams at this scale in the history of enterprise technology. Azure revenue grew 40% in constant currency, and the commercial remaining performance obligation — essentially the backlog of contracted future revenue — increased 99% to $627 billion. That number tells you that the growth is not just happening, it is locked in. Microsoft 365 Commercial cloud revenue grew 19% and the consumer tier grew 33%. LinkedIn grew 12%. Dynamics 365 grew 22%. The company returned $10.2 billion to shareholders through dividends and buybacks in the quarter alone. There is almost no weak spot in this report.

Stock Analyzer: MSFT

Running the stock analyzer with a 13% revenue growth assumption, a 36% profit margin, a 36% free cash flow margin, and a PE and P/FCF of 25 — assumptions that are broadly in line with Microsoft's historical performance and conservative relative to the current AI growth trajectory — the fair value comes out at $718.27 against a current price of $370. The implied current price return is 17.57% annually over the ten year period. That is a meaningful return for a business of this quality, and it supports both Burry's view that $350 is a fine price for the shares and his separate bet that $700 is a realistic destination within two and a half years. The math here is worth taking seriously. Tag me in the community with your own assumptions and let's talk through it.

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