diff --git a/compiler/packages/babel-plugin-react-compiler/src/HIR/PrintHIR.ts b/compiler/packages/babel-plugin-react-compiler/src/HIR/PrintHIR.ts
index 59f067787359f..0e5983d6c8dfd 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/HIR/PrintHIR.ts
+++ b/compiler/packages/babel-plugin-react-compiler/src/HIR/PrintHIR.ts
@@ -72,6 +72,7 @@ export function printFunction(fn: HIRFunction): string {
   if (definition.length !== 0) {
     output.push(definition);
   }
+  output.push(printType(fn.returnIdentifier.type));
   output.push(printHIR(fn.body));
   output.push(...fn.directives);
   return output.join('\n');
@@ -555,7 +556,8 @@ export function printInstructionValue(instrValue: ReactiveValue): string {
             }
           })
           .join(', ') ?? '';
-      value = `${kind} ${name} @deps[${deps}] @context[${context}] @effects[${effects}]:\n${fn}`;
+      const type = printType(instrValue.loweredFunc.func.returnIdentifier.type).trim();
+      value = `${kind} ${name} @deps[${deps}] @context[${context}] @effects[${effects}]${type!== '' ? ` return${type}` : ''}:\n${fn}`;
       break;
     }
     case 'TaggedTemplateExpression': {
diff --git a/compiler/packages/babel-plugin-react-compiler/src/ReactiveScopes/MergeReactiveScopesThatInvalidateTogether.ts b/compiler/packages/babel-plugin-react-compiler/src/ReactiveScopes/MergeReactiveScopesThatInvalidateTogether.ts
index 2c9004e6ad9a6..1e73697783f0b 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/ReactiveScopes/MergeReactiveScopesThatInvalidateTogether.ts
+++ b/compiler/packages/babel-plugin-react-compiler/src/ReactiveScopes/MergeReactiveScopesThatInvalidateTogether.ts
@@ -481,14 +481,20 @@ function canMergeScopes(
 }
 
 function isAlwaysInvalidatingType(type: Type): boolean {
-  if (type.kind === 'Object') {
-    switch (type.shapeId) {
-      case BuiltInArrayId:
-      case BuiltInObjectId:
-      case BuiltInFunctionId:
-      case BuiltInJsxId: {
-        return true;
+  switch (type.kind) {
+    case 'Object': {
+      switch (type.shapeId) {
+        case BuiltInArrayId:
+        case BuiltInObjectId:
+        case BuiltInFunctionId:
+        case BuiltInJsxId: {
+          return true;
+        }
       }
+      break;
+    }
+    case 'Function': {
+      return true;
     }
   }
   return false;
diff --git a/compiler/packages/babel-plugin-react-compiler/src/TypeInference/InferTypes.ts b/compiler/packages/babel-plugin-react-compiler/src/TypeInference/InferTypes.ts
index 4dfeb676a3d0b..8cf98225af391 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/TypeInference/InferTypes.ts
+++ b/compiler/packages/babel-plugin-react-compiler/src/TypeInference/InferTypes.ts
@@ -88,6 +88,7 @@ function apply(func: HIRFunction, unifier: Unifier): void {
       }
     }
   }
+  func.returnIdentifier.type = unifier.get(func.returnIdentifier.type);
 }
 
 type TypeEquation = {
@@ -122,6 +123,7 @@ function* generate(
   }
 
   const names = new Map();
+  const returnTypes: Array<Type> = [];
   for (const [_, block] of func.body.blocks) {
     for (const phi of block.phis) {
       yield equation(phi.type, {
@@ -133,6 +135,18 @@ function* generate(
     for (const instr of block.instructions) {
       yield* generateInstructionTypes(func.env, names, instr);
     }
+    const terminal = block.terminal;
+    if (terminal.kind === 'return') {
+      returnTypes.push(terminal.value.identifier.type);
+    }
+  }
+  if (returnTypes.length > 1) {
+    yield equation(func.returnIdentifier.type, {
+      kind: 'Phi',
+      operands: returnTypes,
+    });
+  } else if (returnTypes.length === 1) {
+    yield equation(func.returnIdentifier.type, returnTypes[0]!);
   }
 }
 
@@ -346,7 +360,7 @@ function* generateInstructionTypes(
 
     case 'FunctionExpression': {
       yield* generate(value.loweredFunc.func);
-      yield equation(left, {kind: 'Object', shapeId: BuiltInFunctionId});
+      yield equation(left, {kind: 'Function', shapeId: BuiltInFunctionId, return: value.loweredFunc.func.returnIdentifier.type});
       break;
     }
 
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/error.todo-repro-missed-memoization-from-capture-in-invoked-function-inferred-as-mutation.expect.md b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/error.todo-repro-missed-memoization-from-capture-in-invoked-function-inferred-as-mutation.expect.md
index 1eb9b98b09529..5205445751249 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/error.todo-repro-missed-memoization-from-capture-in-invoked-function-inferred-as-mutation.expect.md
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/error.todo-repro-missed-memoization-from-capture-in-invoked-function-inferred-as-mutation.expect.md
@@ -13,7 +13,7 @@ component Component() {
     if (data != null) {
       return true;
     } else {
-      return false;
+      return {};
     }
   };
 
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/error.todo-repro-missed-memoization-from-capture-in-invoked-function-inferred-as-mutation.js b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/error.todo-repro-missed-memoization-from-capture-in-invoked-function-inferred-as-mutation.js
index 02114e26530c5..1621ab41c9050 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/error.todo-repro-missed-memoization-from-capture-in-invoked-function-inferred-as-mutation.js
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/error.todo-repro-missed-memoization-from-capture-in-invoked-function-inferred-as-mutation.js
@@ -9,7 +9,7 @@ component Component() {
     if (data != null) {
       return true;
     } else {
-      return false;
+      return {};
     }
   };
 
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/hoisting-simple-const-declaration.expect.md b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/hoisting-simple-const-declaration.expect.md
index ae5bf41e3227c..7939c9143d1d7 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/hoisting-simple-const-declaration.expect.md
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/hoisting-simple-const-declaration.expect.md
@@ -25,18 +25,17 @@ export const FIXTURE_ENTRYPOINT = {
 import { c as _c } from "react/compiler-runtime";
 function hoisting() {
   const $ = _c(1);
-  let t0;
+  let foo;
   if ($[0] === Symbol.for("react.memo_cache_sentinel")) {
-    const foo = () => bar + baz;
+    foo = () => bar + baz;
 
     const bar = 3;
     const baz = 2;
-    t0 = foo();
-    $[0] = t0;
+    $[0] = foo;
   } else {
-    t0 = $[0];
+    foo = $[0];
   }
-  return t0;
+  return foo();
 }
 
 export const FIXTURE_ENTRYPOINT = {
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/hoisting-simple-let-declaration.expect.md b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/hoisting-simple-let-declaration.expect.md
index 8974664b0515f..8d694a984aed5 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/hoisting-simple-let-declaration.expect.md
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/hoisting-simple-let-declaration.expect.md
@@ -25,18 +25,17 @@ export const FIXTURE_ENTRYPOINT = {
 import { c as _c } from "react/compiler-runtime";
 function hoisting() {
   const $ = _c(1);
-  let t0;
+  let foo;
   if ($[0] === Symbol.for("react.memo_cache_sentinel")) {
-    const foo = () => bar + baz;
+    foo = () => bar + baz;
 
     let bar = 3;
     let baz = 2;
-    t0 = foo();
-    $[0] = t0;
+    $[0] = foo;
   } else {
-    t0 = $[0];
+    foo = $[0];
   }
-  return t0;
+  return foo();
 }
 
 export const FIXTURE_ENTRYPOINT = {
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/preserve-memo-validation/useCallback-nonescaping-invoked-callback-escaping-return.expect.md b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/preserve-memo-validation/useCallback-nonescaping-invoked-callback-escaping-return.expect.md
index 14913665c5474..6d9183915467f 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/preserve-memo-validation/useCallback-nonescaping-invoked-callback-escaping-return.expect.md
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/preserve-memo-validation/useCallback-nonescaping-invoked-callback-escaping-return.expect.md
@@ -40,7 +40,7 @@ import { c as _c } from "react/compiler-runtime"; // @validatePreserveExistingMe
 import { useCallback } from "react";
 
 function Component(t0) {
-  const $ = _c(11);
+  const $ = _c(9);
   const { entity, children } = t0;
   let t1;
   if ($[0] !== entity) {
@@ -51,46 +51,39 @@ function Component(t0) {
     t1 = $[1];
   }
   const showMessage = t1;
+
+  const shouldShowMessage = showMessage();
   let t2;
-  if ($[2] !== showMessage) {
-    t2 = showMessage();
-    $[2] = showMessage;
+  if ($[2] !== shouldShowMessage) {
+    t2 = <div>{shouldShowMessage}</div>;
+    $[2] = shouldShowMessage;
     $[3] = t2;
   } else {
     t2 = $[3];
   }
-  const shouldShowMessage = t2;
   let t3;
-  if ($[4] !== shouldShowMessage) {
-    t3 = <div>{shouldShowMessage}</div>;
-    $[4] = shouldShowMessage;
+  if ($[4] !== children) {
+    t3 = <div>{children}</div>;
+    $[4] = children;
     $[5] = t3;
   } else {
     t3 = $[5];
   }
   let t4;
-  if ($[6] !== children) {
-    t4 = <div>{children}</div>;
-    $[6] = children;
-    $[7] = t4;
-  } else {
-    t4 = $[7];
-  }
-  let t5;
-  if ($[8] !== t3 || $[9] !== t4) {
-    t5 = (
+  if ($[6] !== t2 || $[7] !== t3) {
+    t4 = (
       <div>
+        {t2}
         {t3}
-        {t4}
       </div>
     );
-    $[8] = t3;
-    $[9] = t4;
-    $[10] = t5;
+    $[6] = t2;
+    $[7] = t3;
+    $[8] = t4;
   } else {
-    t5 = $[10];
+    t4 = $[8];
   }
-  return t5;
+  return t4;
 }
 
 export const FIXTURE_ENTRYPOINT = {