Michael Burry May Sell Walmart, Alphabet and Valero: Why Valuations Worry Him

Walmart sells groceries, Alphabet powers Google and Valero turns crude oil into fuel. What could make Michael Burry reconsider all three? 

It is the price investors are paying for their future profits.

Burry is weighing changes to these long-held investments over valuation concerns, while drawing parallels between today’s US stock market and the 2000 dot-com peak. The reported comments do not confirm completed sales or new short positions, but they raise a question worth exploring: can a business keep performing well while its stock becomes a less attractive investment?

Each company offers a different way to understand that tension, from Walmart’s growth expectations to Alphabet’s spending demands and Valero’s fluctuating refining profits.

Walmart stock: How much growth does its valuation require?

Walmart has been a successful long-term investment for Burry. Now, he is questioning its valuation. In his reported comments, he included Walmart among long-held winners he would consider selling, reducing or donating because their valuations had become stretched.

He acknowledged that longer-term business trends had supported these investments, alongside a strong bull market. The concern he identified was how expensive the shares had become. The report does not confirm that he has sold Walmart or provide a Walmart-specific price target.

Walmart’s results help explain why investors have rewarded the business. Global e-commerce sales rose 23% in Q2 FY27, while advertising grew 38%. These businesses give the company opportunities to earn more beyond its traditional stores.

However, business growth and an attractive stock valuation are separate questions. Comparing Walmart’s share price with its annual earnings guidance helps illustrate that distinction.

Sources: Benzinga’s October 26 report on Burry’s comments, Walmart’s Q2 FY27 earnings release and Yahoo Finance’s historical-price record. 

At that valuation, investors are paying approximately $42 for every $1 of expected annual adjusted profit. Sustaining such a price requires confidence that Walmart can keep expanding earnings and that its faster-growing businesses will meaningfully improve overall profitability.

This illustrates the risk behind a valuation reassessment: Walmart could continue performing well, yet its shares could struggle if earnings growth falls short of the expectations already reflected in the price. Its operating strengths support the investment case, but they do not, by themselves, establish that any share price is justified.

Alphabet stock: Why do headline profits need a closer look?

Alphabet is among the long-held investments Burry is considering selling, reducing or donating because of stretched valuations. He acknowledged that long-term business trends and the bull market had supported gains in these holdings.

His reported reason for reconsidering Alphabet is valuation. The accessible coverage does not establish that he specifically cited its investment gains, negative quarterly free cash flow or capital-expenditure guidance as reasons. Those figures provide additional context for examining the stock.

Alphabet’s underlying business is growing strongly. Second-quarter revenue increased 24%, operating income rose 30% and Google Cloud revenue grew 82%. However, assessing its valuation requires understanding both where profits came from and how much cash the business is spending.

Sources: Benzinga’s October 26 report on Burry’s comments, Alphabet’s Q2 2026 earnings release and official Q2 earnings-call transcript. 

Two distinctions matter here. First, the investment gain largely reflected increases in the recorded value of Alphabet’s investments. It boosted reported earnings but was separate from operating profit generated by advertising, cloud services and other businesses. A P/E ratio based on those boosted earnings can therefore give an overly flattering impression of recurring profitability.

Second, quarterly infrastructure spending exceeded operating cash generation. That spending could support future growth, but shareholders’ returns depend partly on how successfully Alphabet turns the additional capacity into earnings and cash.

The valuation question is whether today’s price adequately accounts for both the growth opportunity and the investment required to deliver it. These figures help frame that question; they do not independently prove that Alphabet is overpriced or establish Burry’s own fair-value estimate.

Valero Energy stock: Can exceptional refining profits last?

For Valero Energy, the central analytical issue is the earnings cycle. It turns crude oil into products such as petrol and diesel. Its economics depend substantially on the gap between feedstock costs and product selling prices, alongside operating expenses.

Industry crack spreads track that price gap. They indicate refining conditions but exclude other costs, so they are not the same as net profit.

Sources: Valero's Q3 2026 earnings release, October 22, MarketWatch's October 26 closing-price report and the US Energy Information Administration's explanation of crack spreads. 

Those results demonstrate substantial earning power under favourable conditions. They also show how sharply profits can change between comparable quarters.

For a cyclical business, an apparently low earnings multiple can be deceptive if its denominator contains unusually strong profits. Multiplying one exceptional quarter's EPS by four would assume those conditions persist throughout a year.

The useful valuation question is how much Valero could earn across stronger and weaker refining periods. Continued tight fuel supply could support earnings, while narrower product-price spreads could reduce them. Neither path is established by one quarter's results.

Why does Burry see similarities with the dot-com bubble?

High valuations resemble the dot-com era

Burry estimates the S&P 500 at approximately 32 times earnings, compared with 32-34 times around 2000. His concern is that investors are again paying demanding prices for expected profits. These figures use his own earnings adjustments and should not be treated as standard forward P/E ratios.

Record index levels can hide underlying weakness

A few large companies can support the S&P 500 even while many other stocks struggle, because larger companies carry more weight in the index.

Burry reportedly examined 982 record closes since 1980 using seven measures of underlying market strength. Only March 2000 and October 6, 2026 ranked at or beyond the 95th percentile of weakness on all seven measures. That describes unusually weak readings within his study; it does not mean a 95% probability of a crash.

Previous winners can become vulnerable

Burry’s research also highlights how differently stocks performed after the 2000 peak. Shares that had remained near their highs subsequently performed much worse than those already deeply depressed.

Sources: Benzinga’s October 26 report and Burry’s public research previews. Valuation estimates and historical returns are reported findings.

This helps explain his caution towards expensive winners: strong past performance does not guarantee protection when market leadership changes. It does not establish that today’s market will repeat 2000 or that every fallen stock offers value.

Author's take: Test the earnings behind the valuation

The most useful response to this debate is to examine what has to go right at each business.

For Walmart, the test is whether its digital, advertising and membership businesses can lift company-wide profitability enough to support a premium valuation. For Alphabet, it is whether growing AI and cloud revenue ultimately produces stronger cash generation after infrastructure spending. For Valero, it is how much earnings remain when refining conditions become less favourable.

There are credible arguments on both sides. Business improvements can justify higher valuations and strong conditions can last longer than sceptics expect. Equally, a good company can produce disappointing shareholder returns when its price assumes too much future success.

The dot-com comparison is useful as a challenge to those assumptions. Its value lies in testing today's price against sustainable earnings, rather than treating a historical resemblance as a forecast with a fixed deadline.