Michael Burry Accuses Meta Platforms of ‘Common Fraud’ and Inflated Earnings. Should You Still Buy META Stock Now?

Meta Platforms faces scrutiny from investor Michael Burry regarding alleged profit inflation through chip depreciation accounting, alongside increased 2025 capex guidance of $70-$72 billion and the potential departure of its Chief AI Scientist Yann LeCun, contributing to its underperformance among the 'Magnificent Seven' this year. Despite these headwinds, Meta reported robust Q3 2025 revenue growth of 26% to $51.2 billion, strong operational metrics driven by effective AI integration, a solid balance sheet with $30 billion in net cash from operations, and an EPS miss primarily due to a one-time tax charge. Analysts largely maintain a 'Strong Buy' rating, projecting a 35% upside.

Analysis

Meta Platforms (META) is currently navigating investor concerns stemming from Michael Burry's allegations of profit inflation through extended depreciation of Nvidia chips, though the relevance of older chip generations is noted. The company's increased 2025 capex guidance, now projected at $70-72 billion, has also contributed to investor apprehension, positioning META as the worst-performing "Magnificent Seven" stock year-to-date with only a 4.6% gain. Additionally, reports of Chief AI Scientist Yann LeCun's potential departure, a foundational figure in AI, introduce uncertainty regarding Meta's future AI innovation leadership.

Despite these headwinds, Meta demonstrated robust Q3 2025 financial performance, reporting $51.2 billion in revenue, a 26% year-over-year increase, and strong operational metrics including an 8% rise in daily active users to 3.54 billion. The reported EPS miss was primarily attributable to a one-time non-cash income tax charge of $15.93 billion; adjusted for this, EPS would have been $7.25. The company's effective integration of AI has demonstrably enhanced content curation and user engagement, driving significant efficiency and productivity gains across its platforms.

Meta maintains a strong financial position, generating $30 billion in net cash from operating activities in Q3 2025 and holding a $10.2 billion cash balance against $2.1 billion in short-term debt. Analysts largely maintain a "Strong Buy" rating for META, with 45 out of 57 analysts recommending it and a mean target price of $843.94, indicating approximately 35% upside potential from current levels. This reflects confidence in Meta's underlying business strength and strategic AI investments despite recent challenges.

Key Decisions for Investors

• Monitor developments regarding Michael Burry's accounting allegations and their potential impact on Meta's reported profitability and investor confidence.
• Assess the strategic implications of Meta's increased capex guidance and the reported departure of Chief AI Scientist Yann LeCun on its long-term AI innovation and competitive landscape.
• Recognize Meta's robust underlying financial performance, including significant revenue growth, strong operational metrics, and substantial cash flow, which support its strategic investments.
• Consider the strong analyst consensus for a "Strong Buy" and the projected 35% upside, balancing it with the recent stock underperformance and specific company-related risks.