Michael Burry, the investor who gained fame thanks to the film The Big Short, is betting against the largest company in the world, Apple (AAPL -1.22%). Scion Asset Management's latest 13-F (the disclosure document that funds must file with the Securities and Exchange Commission each quarter), reveals that as of the end of the first quarter, nearly 18% of the value of its portfolio was in Apple put options, which become more profitable as the stock price falls. That's a bold bet -- but is it a smart strategy?

Apple: Great when the consumer is strong

It's hard to ignore the warning signs that the financial situation of the average U.S. consumer is weakening: Credit card debt is at an all-time high, inflation has soared, and housing has become unusually expensive. This weakness could prove a drag on Apple, as its devices are nice, but people can live with their old models if they need to. However, Apple hasn't seen its profits or revenue fall yet.

For its fiscal 2022 second quarter (which ended March 26), revenue and diluted earnings per share (EPS) both rose by 9% year over year to $97.3 billion and $1.52, respectively. The real question, though, is how it did in its just-ended fiscal third quarter, as the previously mentioned consumer problems have intensified during the past three months.

Apple is undoubtedly ingrained in American society -- it's nearly impossible to go anywhere without seeing people using iPhones, Airpods, or MacBooks. But will consumers keep paying the premium for the company's devices in these tough economic conditions? Burry is betting that the answer is no, and according to the stock price, he's not alone in his view. Apple is down 23% this year, but the shares could tumble further if its revenue or profits decline.

Trading at 22.2 times earnings, Apple isn't expensive, but it still trades at a premium to the market -- the broad S&P 500 index is valued at 19.1 times earnings. As the Federal Reserve continues to raise benchmark interest rates (which reduces the real value of companies' future profits) the market's multiple is likely to keep dropping, and that trend could drag Apple down too.

This outlook isn't great for Apple or its investors, which is why Burry bought puts against Apple. However, Burry is also investing in another stock that I also think has greater upside. 

Alphabet: One of the world's most dominant companies

Scion Asset Management's fifth-largest holding, Alphabet (GOOG -1.10%), represents nearly 9% of its portfolio. Alphabet has some dominant brands under its umbrella: Google, YouTube, and the Android operating system. Worldwide, these brands have a significant market share and are generating increasing amounts of revenue.

In Q1, Alphabet's sales grew 23% year over year, and it converted 23% of that revenue into free cash flow of $15 billion. However, Alphabet could also see some economic-induced headwinds.

Companies often cut their advertising budgets during recessions, and 80% of Alphabet's revenue in Q1 was derived from advertising. However, the broad audience Alphabet attracts to its products gives businesses a vast pool of consumers to advertise to. Throw in the ability to reliably target consumers, and the odds that businesses will cut their ad spending with Alphabet are reduced.

I'm not saying Alphabet won't have a tougher time during a recession, but it makes sense that it may not struggle as severely as other advertising-reliant companies.

Alphabet trades at 19.5 times earnings, slightly less than Apple, but still above the market average. With both companies sporting similar profit margins, the question of which is the better buy comes down to which is the most resilient.

AAPL Profit Margin Chart

AAPL Profit Margin data by YCharts

I think Alphabet has the more resilient business, as it isn't entirely dependent on consumer spending. Additionally, Alphabet is growing faster than Apple -- and, again, its valuation is slightly cheaper.

While I'm not advocating shorting or buying puts against Apple (even though that would have worked as an investment strategy so far this year), I agree with Burry that Alphabet is a great buy now.