Investor Michael Burry, who recently warned of an AI bubble, recently disclosed that he is buying the dip in some of the most beaten-down technology stocks he sees as bargains. He added to his position in companies including Alibaba (NYSE:BABA), Adobe (NASDAQ:ADBE), PayPal (NASDAQ:PYPL), and Veeva Systems (NASDAQ:VEEV).

Alibaba 

Burry recently added to his position in Alibaba, the Chinese juggernaut whose ADR has dropped by over 40% from its highest point last year. In contrast, Amazon (NASDAQ:AMZN), its American equivalent, has soared, with its market capitalization standing at $2.56 trillion.

Alibaba's stock continued its strong downtrend in May when the company announced a sharp decline in its profitability as it continued boosting its AI investments. 

Still, Burry believes that Alibaba is the most advanced AI company in China, and it is continuing to repurchase its shares. Data shows that its US ADR has reduced its outstanding shares to 2.32 billion from 2.78 billion in 2021.

PayPal

Burry has continued to accumulate PayPal shares, which have fallen from $300 in 2021 to $41 today. He believes that the company has underperformed the market because of the slowing revenue growth, increased profitability, and CEO turnover.

His base case is that its popular brand and cheap valuation may make it a good acquisition target. Indeed, Bloomberg reported that Stripe was considering making a bid for PayPal earlier this year. He said, "The market has been attending PayPal's wake for years now, though the body has yet to show.”

Adobe

Adobe is another beaten-down tech stock that Burry is adding his position in. Its stock has crashed from $700 in 2021 to $204 today. This sell-off accelerated this week after it published its financial results and announced that its CFO was leaving the company. It is never a good sign whenever a senior executive quits. 

Still, Burry believes that the “SaaSPocalypse” has yet to unfold. Despite these concerns, the company continues to perform well, with its gross margin reaching a record high. 

According to Benzinga Pro, analysts expect its annual revenue to grow by 11% this year and by 10% in 2027. While these growth rates are relatively modest, they remain notable for a company facing significant challenges, including intensifying competition.

Veeva Systems

Veeva Systems is a top software company that focuses on the global life sciences industry. Its development cloud includes application suites for the clinical, regulatory, and safety functions of life sciences companies. It also runs the Veeva Quality Cloud and Veeva Data Cloud.

Burry believes that Veeva Systems has become a bargain as investors price in the Salesforce (NASDAQ:CRM) threat. He sees its multiples as being highly attractive, especially when the next bull run in the software industry starts. Veeva has a forward PE ratio of 17.83, lower than S&P 500 Index's 22.

Image: Shutterstock