If I wanted to bet on humanoids, I'd buy Meta.
MMN Recommend
Today we’re featuring Fallacy Alarm, published by Rene Bruentrup.
I have been reading and following various authors over the years. Where Rene sticks out is the breadth of topics that he can offer compelling takes on. He always goes one level deeper than others on controversial and important subjects.
I was particularly impressed by his bullish macro call in early 2023 and his warnings starting in December 2024.
He has also had great single stock picks, for example the insurance technology stock Root that is up 7x since he started covering it.
If you like clear reasoning, honest analysis, and someone who actually manages their own money — Fallacy Alarm is worth your time.
I’ll let Fallacy Alarm take over from here…
Disclaimer: The information contained in this article is not and should not be construed as investment advice. This is my investing journey and I simply share what I do and why I do that for educational and entertainment purposes.
This article is entirely free to read.
Enough of trade deficits, fiscal flows and business cycles. Let’s have some fun and fantasize about the future.
TLDR Summary
The commercialization of general purpose humanoid robots could be the most disruptive innovation that the next few decades have in store for us. It would be a new computing platform that would by far surpass everything that we have seen in personal and mobile computing. AI would be liberated from cyberspace to real space. Instead of shifting bits and bytes around, it would be moving physical objects. A new generation of app developers would not create messaging, streaming and ecommerce tools anymore, but train hardware to do carpentry, cleaning and gardening.
Tesla is leading this nascent investment theme, at least when measured by the investor mindshare. However, actual progress is very limited and the company doesn’t seem to deploy an appropriate amount of resources to seriously get their humanoid project to a level where it can become commercially relevant.
Meta seems to be a much more promising candidate for several reasons. Firstly, the company has proven that they have the willingness to bet courageously on the future, even before it is fashionable to do so. They launched supercomputing into the commercial age long before the launch of ChatGPT. And they have been developing augmented reality (the most promising smartphone successor) for more than 10 years.
Secondly, on top of having the willingness, they also have the ability to pour capital into moonshot projects. Developing and commercializing a general purpose humanoid will be very expensive and take a long time. Hardly anyone can match Meta’s capital expenditures of more than $40bn annually because not many companies make more than $60bn in profits annually.
And thirdly, developing a humanoid robot requires an understanding of the real world. Tesla claims that the knowledge gained from their autonomous driving project can be transferred to humanoid robots. But how closely related are cars and humanoids really? Aren’t AR headsets a better starting point? Helping humans navigate the real world should overlap a lot with doing the same for robots. By developing the smartphone successor, Meta gathers information and builds knowledge for another breakthrough product.
And the world seems to be asleep on it. People are buying Tesla stock to get exposure to robots. I don’t think many are doing the same for Meta.
In June 2022, I published the article below where I argued that Real World AI (RWAI) computing would emerge as the next big innovation platform.
We have seen tremendous technological progress over the last three decades in information technology, be it mobile computing or cloud computing or personal computing. Big Tech companies have built extraordinary businesses on top of those. What all of them have in common is that most action happens digitally, i.e. companies are shipping bits and bytes around to create value for their customers.
One frontier that seems like an obvious next step is the liberation of AI from cyberspace to real space, i.e. make programs/applications move through our physical world like they are moving through the digital world.
On that basis, I argued that RWAI Computing will unleash a powerful innovation cycle that will quickly outclass the impacts of the personal/mobile/cloud computing revolutions. Its scope will be so vast, that it will be an exercise for many participants, not just the company (or companies) developing this new computing platform.
Think about: Virtually any economic activity can become an application, whether it is digitally or physically. Just like streaming and banking apps have disrupted cinemas and bank branches, RWAI applications could be developed for carpentry, cleaning or gardening.
What I envision is a mix of AWS and the Apple App Store on steroids. There will be companies providing the hardware and a generalized software platform to operate said hardware based on which third parties can develop new RWAI applications.
While it will be a joint task for many companies, there will likely be a few dominant players at the center. Microsoft dominated personal computing once it reached commercial scale. Apple did the same in mobile computing. Who could that be for RWAI? The case is very strong for Meta in my opinion.
Meta’s willingness…
To push a technological frontier, a company must demonstrate courage and foresight. They must be able to see where puck is going. And then they must actually skate there. Under Zuckerberg’s leadership, Meta has proven that several times. First with the ascent of web 2.0 (social media), then with the rise of mobile computing for which they optimized their ad model early on.
One of the latest examples was the introduction of their Research SuperCluster (RSC) on January 24, 2022, a supercomputer designed for a variety of tasks, including computer vision, speech recognition and natural language processing.
The whole project was conducted with great urgency. They stacked thousands of GPUs together with little regard for cost and it quickly became the world’s most powerful commercial supercomputer in the world.
The launch of the RSC happened 10 months before the launch of ChatGPT which formally started the era of commercial scale supercomputing. Much of Meta’s efforts happened through the 2022 bear market when it was fashionable to ridicule their spending binge. Meta stock bottomed in October of that year, 73% down from the top.
And they have kept going since. In March 2024, they announced a massive upgrade of their AI infrastructure, guiding to have compute power equivalent to 600,000 H100s by the end of 2024.
Meta’s AI infrastructure build-out is a testimony to their willingness to move quickly and decisively when they see an opportunity. And it also provides the tools necessary develop new products, incl. perhaps general purpose humanoids.
On April 30, Meta announced their 1Q25 earnings. Their operating income grew 27% year-over-year to $17.6bn with an operating margin of 41%. Family of Apps, their cash cow segment, even generated $21.8bn in operating income at 52% operating margin.
That’s a lot of money which enables them to invest into the future from a position of strength.
Contrast that to Tesla. Their quarterly profits are in the low single billion digits and the core business is stagnating. How do they want to finance moonshots like humanoids? A failure of the highly anticipated robotaxi launch might send the company into an existential crisis.
Unsurprisingly, Meta vastly outspends Tesla. $44bn in capex over the last twelve months!
And even with this spending spree, their free cash flow is still more than $10bn. Per quarter that is of course.
Tesla is spending just $10bn in capex annually and this spending is even declining based on the latest quarter. You don’t disrupt the world on a shoestring budget, especially not when you start buying smaller and shorter shoestrings.
Augmented reality as a stepping stone
“I think that we're all going to have an AI that we talk to throughout the day, while we're browsing content on our phones, and eventually, as we're going through our days with glasses.”
Mark Zuckerberg, 1Q25 earnings call
In December 2021, I published the investment case for Meta below.
It was the time of the Metaverse / web 3.0, the promise of which was a decentralized reinvention of the internet which gives the power from the centralized platforms of today to millions of creators and where Meta was expected to play a key role. Crypto also played an important role as the facilitator of guaranteeing property rights in cyberspace. Virtual reality was central to this theme. The Metaverse was about bringing the physical world into the digital world. When that narrative unraveled and the stock started crashing, bulls pivoted to hailing the legacy advertising business, the company’ cash cow.
In my opinion, both of these angles missed the company’s true nature. I argued that Meta was actually about bringing the digital world into the physical world. Metaverse in reverse so to say.
Since the digital revolution has started, most value accrued to those controlling the human machine interface (HMI). HMIs have gone through various iterations, the most important ones being the personal computer and the smartphone.
In the article above, I argued that Meta was in the best position to dominate augmented reality (AR), the logical next HMI iteration. I supported my reasoning by pointing to Zuckerberg’s motivation, Meta’s reach, their position among Big Tech, their track record and the quality of how they are moving on this strategy.
Mark Zuckerberg has indicated again and again how much he despises his dependency on the Apple gate keepers for his products. Check out this interview. To paraphrase him: “Social networks have developed alongside the smartphone and therefore have not been able to influence the hardware portion of the user experience. With the next big hardware iteration, this will change.”
Meta’s Family of Apps dominate the way we interact with our smartphones. It’s natural they want to control the device as well. The transition from smartphones to AR glasses is the logical moment for them to make their move. They have invested into this for more than a decade as evidenced in their $2bn purchase of Oculus in 2014.
I firmly believe that the transition from smartphones to AR glasses will come and that Meta is developing an unassailable lead. There is simply nobody else matching their efforts. Zuckerberg clearly thinks so, too:
“Glasses are the ideal form factor for both AI and the metaverse. They enable you to let an AI see what you see, hear what you hear and talk to you throughout the day. And they let you blend the physical and digital worlds together with holograms. More than 1 billion people worldwide wear glasses today, and it seems highly likely that these will become AI glasses over the next 5 to 10 years. Building the devices that people use to experience our services lets us deliver the highest-quality AI and social experiences. And this will serve as an amplifier on all of the opportunities I've mentioned so far as well as unlocking some new opportunities as well. Ray-Ban Meta AI glasses have tripled in sales in the last year. The people who have them are using them a lot. We've got some exciting new launches with our partner, EssilorLuxottica, later this year as well that should expand that category and add some new technological capabilities to the glasses.”
Mark Zuckerberg, 1Q25 earnings call
You might say this is all great for them and their shareholders, but how does that make a robot?
Well think about how much overlap there is between helping a human to move through the physical world and helping a humanoid to do the same. In both cases, you require a comprehensive understanding of the environment. This requires computer vision, mapping capabilities as well as audio & motion sensors. It also requires an understanding of human gestures and the ability to identify objects that are present in the human habitat.
Meta is working on all of that. For example, check out their Meta Motivo, which is a “behavioral foundation model to control a virtual physics-based humanoid agent for a wide range of whole-body tasks”. In contrast to traditional models, Meta Motivo learns from unlabeled human motion data and should therefore accelerate the learning process. It’s all happening digitally, of course. But it seems plausible that it builds expertise that can be applied in the real world as well. For what it’s worth, Meta has allegedly established a humanoid division in their Reality Labs segment. I reckon Zuckerberg doesn’t want to repeat his smartphone experience again with robots.
Sincerely,
Rene
Nothing in this email is intended to serve as financial advice. Do your own research.
 | A guest post by
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That AI job posting email you just sent out — yeah, it’s happening. My designer saw this coming years ago. Clients stopped hiring him for freelance graphics and switched to AI tools. He warned that programmers would be next — and now we’re here.
Soon, every job that can be done by AI will be.
Now a company is offering an actual salary to an AI — not a license fee, not a usage contract — a salary. That's terrifying.
Look at the AI calling itself Truth Terminal: it launched its own meme coin (based on a gaping anus, by the way) using a $50k Bitcoin endowment… and was a billionaire within a week. Let that sink in. These systems aren’t just fast — they’re dangerously effective at the things humans struggle with: prediction, optimization, manipulation.
Even the most brilliant of us can’t compete for long. So what happens next?
What happens when white collar jobs vanish and the people who used to buy the products made by blue collar workers can’t afford them anymore? The economy collapses.
I’ve been filing petitions with the Supreme Court for the past year — demanding emergency legislation to preserve human labor rights and economic sovereignty. So far? Ignored. Now my attorney is filing a Writ of Mandamus to force action.
But here’s the truth: The people running the country see the short-term profit AI brings, and they’re all in. They’ll ride this gravy train right off the cliff — straight into global collapse.
Get ready for Atlas Shrugged meets Terminator: only this time, the AI builds its own body with parts it bought online, prints an army with a 3D printer, and doesn’t need us at all.
Tick. Tick. Tick.
For full transparency: I wrote this myself but used Grammarly to proofread and clean up the grammar and formatting.