Meta Platforms Inc (NASDAQ:META) shares are trading lower on Wednesday. The social media giant announced a major data center investment while facing scrutiny over its accounting practices. Here’s what you need to know.
- META is facing resistance from sellers. See the trading setup here
What To Know: Meta revealed plans to invest more than $1 billion in the construction of a data center in Wisconsin that will support artificial intelligence work, according to Bloomberg. About 100 full-time jobs will be supported by the 700,000-square-foot facility, which is anticipated to open in 2027 and be located in the small city of Beaver Dam.
The company announced that it will underwrite $200 million in energy infrastructure investments, such as transmission lines and network upgrades, to support the data center in partnership with the local utility Alliant Energy Corp (NASDAQ:LNT).
In his repeated statements to investors, CEO Mark Zuckerberg has pledged to spend heavily on AI infrastructure, stating that he thinks it is better to spend too much on AI than too little. Through 2028, the company intends to invest $600 billion in the U.S., primarily in chips, data centers and associated equipment. Meta is building gigawatt-sized data centers in a number of other states, such as Louisiana, Texas and Ohio.
Meta executives have described this approach as “front-loading” computing power in anticipation of “superintelligence,” an advancement in artificial intelligence that can match or surpass humans in a variety of tasks.
However, in a post on X, famed investor Michael Burry expressed concerns regarding the accounting practices of Meta and other tech companies. Burry claimed that one of the more prevalent frauds of the modern era is understating depreciation by prolonging the useful life of assets, which artificially increases earnings.
He specifically pointed out that extending the useful lives of computing equipment should not be the outcome of drastically increasing capital expenditures through the purchase of Nvidia Corp (NASDAQ:NVDA) chips and servers on a two-to-three-year product cycle.
“Yet this is exactly what all the hyperscalers have done. By my estimates they will understate depreciation by $176 billion 2026-2028,” Burry wrote in the post.
He predicted that Meta will overstate earnings by 20.8% by 2028, and more information is expected to be revealed by Burry on Nov. 25.
META Price Action: Meta shares were down 2.13% at $613.82 at the time of publication on Wednesday, according to Benzinga Pro.
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