Meta's AI Gamble: Why Investors Should Think Twice Before Buying $META

Core Insights - Meta's stock has increased by 5.7% in 2025, which is significantly lower than the S&P 500's 15.2% rise, indicating underperformance in the market [2] - Heavy investments in AI are aimed at positioning Meta as a leader in super intelligence, but these expenditures have not yet translated into sufficient revenue growth to attract investor interest [3][4] - Concerns are raised regarding Meta's financial strategies, particularly its use of off-balance sheet financing for a $27 billion data center, which echoes tactics used by Enron [6][13] Financial Maneuvers - Meta is constructing a $27 billion data center in Louisiana, financed through a joint venture with Blue Owl Capital, where Meta holds a 20% stake [8] - The financial structure involves a Variable Interest Entity (VIE), which allows Meta to keep the data center off its balance sheet, raising concerns about the transparency and sustainability of this approach [7][9] - The use of VIEs is scrutinized, as it is unclear whether Meta truly lacks control over the joint venture's economic performance, which is a requirement for it to be classified as an operating lease [9][10] Market Implications - The anticipated tripling of AI capital expenditures by 2030 is expected to lead to a significant increase in AI bonds, with Meta and other companies like Oracle facing rising costs of capital due to declining credit ratings [12][14] - Investors are advised to monitor credit risks associated with major AI cloud service providers, as the financial health of these companies will impact their ability to fund future projects [15][16] - The overall landscape for AI data center providers is shifting, with a focus on identifying winners and losers based on their creditworthiness and financial strategies [5][15]