METU ETF doubles down on Meta's $145 billion AI bet

The Direxion Daily META Bull 2X ETF offers the most concentrated wager on Mark Zuckerberg's AI buildout, delivering 200% of Meta's daily move as the company commits up to $145 billion in 2026 capital spending.

"We have quite a number of offers at a meaningful premium over what we paid for the compute," Zuckerberg said on Meta's second-quarter earnings call, describing plans to sell excess capacity to third-party customers.

Meta's free cash flow fell 91% to $784 million in the quarter ended June 30 from $8.55 billion a year earlier, while 2026 capital expenditure guidance rose to $130 billion-$145 billion from $125 billion-$145 billion. The leveraged fund has lost 59.73% over the past year versus META's 27.79% decline, and is down 25.14% since its June 2024 launch even as the underlying stock gained 13.32%.

The ETF's daily leverage reset means compounding can erode long-term returns even if Meta's AI bet succeeds, making it a short-term trading tool rather than a buy-and-hold vehicle. Meta shares, trading at roughly 17 times forward earnings, fell 10% after the results.

Zuckerberg's $145 Billion Compute Bet

Meta's capital spending has grown 71.25% year over year, with 2026 guidance of $130 billion-$145 billion versus roughly $72 billion in 2025. Most of that outlay is directed at AI infrastructure — data centers, custom silicon, and computing capacity — as the company races to reduce its reliance on Nvidia and improve long-term returns. Reuters reported this month that Meta plans to double overall computing power to 7 gigawatts this year and again to 14 gigawatts next year, with 32 data centers in operation or under construction.

The spending has strained the balance sheet. Long-term debt rose to $83.7 billion from $58.7 billion at the end of last year, cash and equivalents shrank 57%, and Meta suspended share repurchases in the first six months of 2026. Operating income fell 8% to $18.8 billion as costs and expenses surged 55%, with research and development up 68%. The company also booked severance from a May restructuring that cut about 8,000 jobs, or roughly 10% of its workforce.

The strain echoes Alphabet, which last week reported its first-ever cash-flow-negative quarter, and contrasts with Microsoft, whose shares rose 4.4% after its cloud business cushioned a 23% drop in free cash flow. Meta's revenue, by contrast, jumped 28% to $60.8 billion, the fastest pace since late 2021, with 3.6 billion daily active people across its apps.

Why Leverage Cuts Both Ways

METU seeks 200% of Meta's daily performance before fees, using swaps and futures that reset each trading day. If META rises 2% in a session, the fund aims to gain about 4%; a 2% drop targets a 4% loss. That daily rebalancing means long-term returns can diverge sharply from simply doubling the stock's cumulative move — in volatile markets, the resets can erode value even when META trends higher.

The fund's record shows the cost. Since its June 2024 inception, METU has returned negative 25.14% while META gained 13.32%, a gap driven by daily compounding. Its maximum drawdown stands at 63.90%, and the fund holds $362.52 million in net assets with a 1.02% expense ratio. Year to date, METU is down 39.77% versus META's 15.51% decline.

Zuckerberg has argued the payoff justifies the outlay, telling analysts that AI is "accelerating every part of our core business" and that personal AI agents will become a huge consumer business. Chief Financial Officer Susan Li said selling Meta's technology to other companies would help drive returns, adding that "by 2028, we'll have turned over a lot of cards." Meta also faces legal risk: four states are seeking $1.4 trillion in penalties over accusations its platforms addict young users.

For investors, the calculus is straightforward. METU amplifies gains if Meta converts its record spending into faster revenue growth and higher earnings, but the daily reset makes it a short-term instrument. Owning META directly, at roughly 17 times forward earnings, offers the same AI thesis without the compounding drag. The stock's 30% decline over the past year suggests the market has yet to price in a payoff.

This article is for informational purposes only and does not constitute investment advice.