Michael Burry, the prominent American investor, has delivered a sharp warning to Meta CEO Mark Zuckerberg. He strongly criticizes the company's aggressive push into artificial intelligence infrastructure. Burry believes this move threatens Meta's core financial strength.
Burry's Critique of Meta Compute
Recently, Mark Zuckerberg announced a major new initiative called Meta Compute. In a post on Threads, Zuckerberg outlined ambitious plans. "Meta is planning to build tens of gigawatts this decade, and hundreds of gigawatts or more over time," he stated. Zuckerberg emphasized that engineering, investing, and building this infrastructure would become a strategic advantage. He appointed Santosh Janardhan and Daniel Gross to lead the effort.
Michael Burry responded swiftly on social media platform X. He declared that Meta is wasting its saving grace by building Meta Compute. Burry predicted this would cause the company's return on invested capital, or ROIC, to crash dramatically.
Why Burry Thinks Meta Is Making a Mistake
Burry argues that Meta's true strength has always been its asset-light software model. For years, the company generated enormous profits from code and advertising. It did this with minimal physical infrastructure. This lean approach allowed profits to scale efficiently without heavy capital investment.
Now, with Meta Compute, the company is shifting direction. Reports suggest Meta plans to spend around $600 million through 2028. This money will fund data centers, energy grids, and custom chips to power the new AI infrastructure. Burry sees this spending spree as a fundamental threat.
He explains that this massive capital expenditure increases the denominator in the ROIC equation. Return on invested capital measures how effectively a company turns investment into profit. By pouring money into physical assets, Meta makes it much harder to sustain its historically high efficiency. The old model scaled profits with little capital. The new model requires huge upfront investment.
Accusation of Giving In to AI Arms Race
Burry also accuses Zuckerberg of "giving in" to the industry-wide AI arms race. He suggests Meta is sacrificing its profitable, lean model for a high-risk bet. This bet relies on physical infrastructure, which traditionally offers lower efficiency compared to software.
While much of Wall Street celebrates Meta's AI ambitions, Burry stands as a contrarian voice. He warns of significant long-term risks. His critique highlights a tension between aggressive expansion and financial discipline.
Zuckerberg's Vision for Meta Compute
In his Threads announcement, Zuckerberg provided more details about the new initiative. He confirmed Santosh Janardhan will continue leading technical architecture, software, silicon programs, and global data centers. Daniel Gross will head a new group focusing on long-term capacity strategy, supplier partnerships, and business modeling.
They will collaborate closely with Dina Powell McCormick, Meta's new President and Vice Chairman. Her role involves partnering with governments and sovereigns to build and finance Meta's infrastructure. Zuckerberg expressed his enthusiasm for scaling Meta Compute. He aims to deliver "personal superintelligence to billions of people around the world."
The contrast between Zuckerberg's ambitious vision and Burry's stark warning defines this story. It raises critical questions about the future of tech giants investing heavily in AI hardware.
