Michael Burry's Scion Asset Management has disclosed a bullish position on Microsoft, purchasing December 2028 LEAP call options with a strike price in the low $700s. The trade bets the stock will nearly double from its trading level of around $356 at the time of disclosure. This move contrasts with Burry's previous short positions in AI names like Nvidia and Palantir, signaling a specific conviction on Microsoft's value.

The Mechanics of the Trade

LEAPs are call options with expirations extending more than a year. Burry’s December 2028 contracts grant the right to buy 100 Microsoft shares per contract at around $700 before expiration. Profitability requires Microsoft to exceed the strike price plus the premium paid for the contracts. If the stock falls short of this total by December 2028, the entire premium is lost. Burry noted that the $350 level for Microsoft represents a good entry point and characterized the longer-dated options as inexpensive relative to his outlook, allowing him to express conviction without the capital outlay of a direct stock purchase.

The specific capital committed remains unknown. Scion Asset Management deregistered from the SEC on November 10, 2025, transitioned to a family office structure, and the June 25 Substack post did not include contract counts or dollar figures. Consequently, it is unclear whether this position is a small speculative bet or a major portfolio allocation.

Microsoft's Financial Context

Microsoft stock has declined approximately 32% from its July 2025 peak of $550.83. Despite the drop, operational metrics show strong growth. Azure cloud revenue increased 40% in the most recent quarter, and annualized AI revenue surpassed $37 billion, rising 123% year over year. Furthermore, contracted revenue reached $627 billion in the most recent quarter, up 99% year over year including OpenAI, with about 25% recognized over the next 12 months, a 39% increase from the prior year.

The stock decline is largely attributed to Microsoft's capital expenditure plan. The company committed $190 billion for capital expenditures in 2026, primarily directed toward AI infrastructure. This spending plan caused shares to fall over 3% in after-hours trading following the earnings announcement, as investors expressed concern over the duration of heavy spending before returns materialize.

Strategic Rationale and Market Comparison

Burry addressed the software selloff in his Substack post, labeling it a product of "reflexive market dynamics"—a feedback loop between declining stock prices and stress in the bank debt market—rather than a sign of fundamental business deterioration. He applied similar logic to justify long positions in Adobe and PayPal. While forty Wall Street analysts rate Microsoft a Buy or Strong Buy with a consensus price target of $561.11, Burry's strike price exceeds this by $139. He is betting that the market is underestimating the company's potential, viewing Microsoft as a fundamentally intact name that has been beaten down.

Considerations for Investors

Retail investors considering copying this trade face distinct risks. If Microsoft closes at $650 in December 2028, a shareholder would gain roughly 80%, but Burry's options would expire worthless. A strong rally that fails to reach the strike price plus premium results in a total loss of the option capital. Buying shares directly provides exposure to the same thesis without an expiration date. At roughly $360, the stock trades at about 28 times forward earnings. Burry himself described $350 as a solid entry for common stock buyers, framing the LEAPs as a vehicle suitable for his specific outlook and structure.

Microsoft is eliminating 605 positions in Redmond, Washington, effective September 4, as part of its ongoing workforce adjustments. The reduction is detailed in a Worker Adjustment and Retraining Notification (WARN) notice filed with the state. This move follows a broader strategic realignment that previously included cutting 4,800 jobs across its sales and Xbox divisions to streamline operations and focus on key growth areas.

The latest layoffs specifically target the Redmond location, though the company has not disclosed which specific departments or job functions will be impacted. The filing confirms the exact date for the workforce reduction, providing clarity for affected employees. This action aligns with Microsoft's continued efforts to adapt its operational structure to meet changing market conditions and prioritize long-term strategic goals.

Layoff Details

The WARN notice provides specific information regarding the scope and timing of the reductions:

While the previous memo regarding the 4,800 job cuts did not specify a timeline or regional impact, this filing offers concrete details for the Redmond workforce. Microsoft has not provided a further breakdown of the layoffs by geography or specific roles beyond this notice.