Michael Burry, the famously contrarian investor, issued a scathing critique following Meta Platforms, Inc. (NASDAQ:META) following CEO Mark Zuckerberg‘s announcement of a massive initiative to build hundreds of gigawatts of AI capacity.
In a social media post on Monday, Burry warned that the company is “throwing away its one saving grace,” by building what it calls Meta Compute.
“Watch ROIC crash,” he added.
For Burry, that grace was Meta’s historical identity as an asset-light software powerhouse.
By committing to a reported $600 billion in capital expenditures for data centers, energy grids and custom chips through 2028, Meta is becoming extremely capital-intensive.
Burry’s prediction of an “ROIC crash” refers to return on invested capital, a measure of how effectively a company turns the money it invests into profitable returns.
In the past, Meta generated immense profit from code and ad space, requiring minimal physical infrastructure relative to its earnings.
Now with Meta Compute, the denominator of the ROIC equation (invested capital) is set to explode in size and the efficiency of Meta’s business model will degrade, according to Burry.
As Burry sees it, Zuckerberg has “given in” to the industry-wide AI arms race, sacrificing the money-printing machine that Meta was for a high-risk, low-efficiency bet on physical infrastructure.
As the market processes the sheer scale of Meta Compute, Burry remains the one of the only contrarian voices expressing doubt about the company’s future.
META Price Action: Meta stock was down by more than 2% on Tuesday, trading at $628.13 according to data from Benzinga Pro.
Image created using artificial intelligence via MidJourney.
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