Meta Platforms builds cloud business to sell excess AI capacity, challenging major providers

Meta building cloud business to sell excess AI capacity, Bloomberg News reports

July 1 (Reuters) - Meta Platforms (META.O), opens new tab is building a cloud business to sell excess AI computing capacity, Bloomberg News reported on Wednesday citing people familiar with the matter. The move could reduce Meta's reliance on advertising revenue and help it take on major cloud companies, including Amazon (AMZN.O), opens new tab, Microsoft (MSFT.O), opens new tab and Alphabet (GOOGL.O), opens new tab. Shares of the company were up nearly 6% in premarket trading. Meta did not immediately respond to a request ⁠for comment. Reuters could not independently verify the report. One option under consideration is offering customers access to AI models hosted on Meta's existing infrastructure, similar to Amazon Web Services' Bedrock platform, the report said. Meta CEO Mark Zuckerberg had said earlier this year that the company could enter the cloud computing business if it overspends on data centers and has excess capacity. Big Tech firms are expected to spend more than $700 billion on ⁠AI infrastructure this year, up from around $400 billion in 2025. "It's definitely on the table," Zuckerberg said at Meta's annual shareholder meeting in May, adding that "almost every week," other companies approached Meta asking it to sell them access to its AI ⁠models the way cloud providers do or looking to buy its spare computing capacity at a premium. "We haven't done that yet, because we think that we ⁠have a use for the compute. But obviously, if we get to a point where we feel that we have overbuilt, then ⁠that is an option that we have, and that is partially what gives us confidence in investing in building this out." Reporting by Anhata Rooprai and Aditya Soni in Bengaluru; Editing by Jonathan Ananda Our Standards: The Thomson Reuters Trust Principles., opens new tab

Meta Stock Rises on Reports the Company Is Building a Cloud Business to Sell Excess AI Compute - Meta Pla

* Meta Platforms stock is showing upward momentum. What's ahead for META stock? The Report According to Bloomberg, Meta is forming a business to generate revenue from excess computing power sold to outside customers as part of an internal initiative called Meta Compute. The plans include two potential offerings. The first involves selling access to various AI models hosted on Meta's existing infrastructure -- similar to Amazon Web Services' Bedrock offering -- with Meta running the data centers and chips powering the models, including its own Muse Spark models, and charging developers to access them. The second involves selling access to raw computing capacity, similar to neocloud businesses like CoreWeave. Meta Compute is led by Santosh Janardhan, Meta's head of infrastructure; Daniel Gross, a leader inside the Meta Superintelligence Labs AI unit; and Meta President Dina Powell McCormick. Bloomberg noted that the company's plans are still in development and could change. A Meta spokesperson declined to comment. Meta Shares Trend Higher META Price Action: At the time of publication, Meta shares are trading 7.05% higher at $603.00, according to data from Benzinga Pro. Image via Shutterstock This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Why is Meta Platforms stock surging today? By Investing.com

Investing.com -- Meta Platforms stock surged 6.0% in pre-open trading today after Bloomberg reported the company is developing plans for a cloud infrastructure business that would sell access to its AI computing power and models to external customers. The move would transform Meta's sprawling and expensive data center buildout into a direct revenue-generating business, directly challenging established cloud giants including Amazon Web Services, Microsoft Azure, and Google Cloud. The announcement did not come entirely out of nowhere. CEO Mark Zuckerberg had signaled at Meta's annual shareholder meeting in late May that selling excess compute capacity was "definitely on the table," and today's reporting indicates those plans have since taken concrete shape. The news arrives as a meaningful sentiment reversal for a stock that had been weighed down by a federal judge's decision on June 29 to allow a multi-state child addiction lawsuit to proceed, adding to a difficult June for the broader Magnificent 7 cohort. Meta's move substantially outpaced the index, underscoring that the cloud business report was a company-specific catalyst rather than a macro-driven lift. Competitor hyperscaler stocks, by contrast, felt pressure from the news as Meta's entry into the cloud market introduces a new competitive threat. Taken together, the combination of a transformative strategic announcement, a recovering broader market, and a stock that had already pulled back significantly from its 52-week high of $796.25 created the conditions for today's sharp pre-market rally, as investors reassessed the long-term return potential of Meta's AI infrastructure spending. This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Meta Platforms stock surges 8% on cloud business plans By Investing.com

Investing.com -- Meta Platforms (NASDAQ:META) shares jumped as much as 8% Wednesday morning following a Bloomberg report that the tech giant plans to enter the cloud infrastructure market by selling its excess AI computing capacity. The move sets up direct competition with established hyperscale giants like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP), while introducing new dynamics to the broader AI ecosystem. According to sources familiar with the matter, the initiatives are developing under an internal segment known as Meta Compute. Meta is reportedly exploring a dual-pronged approach to monetize its massive infrastructure investments: * Model-as-a-Service: Selling access to various AI models hosted on Meta's infrastructure -- such as its own Muse Spark models -- similar to AWS's Bedrock offering. Meta would operate the data centers and chips while charging developers for access. * Raw Compute Infrastructure: Selling access to raw, bare-metal computing capacity, positioning itself against emerging "neocloud" providers like CoreWeave. While the news sent Meta shares surging, it weighed heavily on other hyperscaler and neocloud stocks as a major new competitor entered the arena. In a morning note to clients, Adam Crisafulli, analyst and founder of Vital Knowledge, detailed the sharply contrasting viewpoints driving market sentiment following the news. The Bull Case: Infrastructure Monetization On the positive side, Crisafulli noted that the shift directly answers long-standing investor concerns regarding Meta's aggressive capital expenditures. What bulls will say: "Meta has been one of the heaviest spenders (in terms of capex/revenue) and many feared it was building way more capacity than it could ever use internally, so this external cloud business will help monetize all that infrastructure, bolstering revenue, margins, and cash flow," Crisafulli wrote. "Since the industry in aggregate still seems to be capacity constrained, this Meta compute infrastructure will likely be quickly utilized by others." Conversely, the pivot could be interpreted as a sign of deceleration or miscalculation regarding Meta's internal AI trajectory, matching a broader pattern among tech giants. What bears will say: "The formation of an external cloud platform is a tacit admission from mgmt. that it overbuilt capacity and/or is falling short on its own internal AI model initiatives," Crisafulli warned. "Meta isn't the first company to make this transition - SpaceX's xAI also appears to be dialing back expectations for its internal AI tools (Grok and Cursor) and has started selling capacity to external customers (including Google and Anthropic)." Crisafulli further cautioned that if Meta and xAI continue to pull back on internal usage, the ramifications will ripple through the supply chain: "If Meta and SpaceX slow the pace of capacity additions over the coming months and quarters, it would deal a blow to the pick-and-shovel providers capitalizing on the data center boom." Ultimately, the team at Vital Knowledge views the news as a double-edged sword for the tech sector, isolating the benefits primarily to Meta itself while casting a shadow over the broader hardware and cloud ecosystem. What we think: "The Meta news is great for that company specifically, but negative for sentiment toward pick-and-shovel providers (and it could weigh on other hyperscalers/neocloud companies too)."

Meta building cloud business to sell excess AI capacity, Bloomberg News reports

July 1 (Reuters) - Meta Platforms is building a cloud business to sell excess AI computing capacity, Bloomberg News reported on Wednesday citing people familiar with the matter. The move could reduce Meta's reliance on advertising revenue and help it take on major cloud companies, including Amazon, Microsoft and Alphabet. Shares of the company were up nearly 6% in premarket trading. Meta did not immediately respond to a request for comment. Reuters could not independently verify the report. One option under consideration is offering customers access to AI models hosted on Meta's existing infrastructure, similar to Amazon Web Services' Bedrock platform, the report said. Meta CEO Mark Zuckerberg had said earlier this year that the company could enter the cloud computing business if it overspends on data centers and has excess capacity. Big Tech firms are expected to spend more than $700 billion on AI infrastructure this year, up from around $400 billion in 2025. "It's definitely on the table," Zuckerberg said at Meta's annual shareholder meeting in May, adding that "almost every week," other companies approached Meta asking it to sell them access to its AI models the way cloud providers do or looking to buy its spare computing capacity at a premium. "We haven't done that yet, because we think that we have a use for the compute. But obviously, if we get to a point where we feel that we have overbuilt, then that is an option that we have, and that is partially what gives us confidence in investing in building this out." (Reporting by Anhata Rooprai and Aditya Soni in Bengaluru; Editing by Jonathan Ananda)