Meta plans to sell excess AI capacity through new cloud business, mirroring SpaceX strategy

Meta, like SpaceX, looks to turn excess AI compute into cash

Meta has spent billions of dollars developing AI and building out data centers to support it. But now, the company may be preparing to put those data centers to a more immediately profitable purpose. On Wednesday, Bloomberg reported that Meta is developing plans for a cloud infrastructure business, selling access to both AI compute power and models. The move would pit it against the big cloud providers like Amazon Web Services, Google Cloud, and Microsoft Azure. Meta's decision to sell off excess compute comes weeks after SpaceX, via xAI, announced similar plans. In early May, SpaceX signed a deal with Anthropic to buy out all of the compute capacity at SpaceX's Colossus 1 data center. SpaceX has signed similar leases since with Google and Reflection AI. The fact that Meta is doing the same is a signal that the winners of the AI race may not be the ones providing the best models and services, but rather the ones who own the data centers. That is, if the demand for compute continues to hold, and if data centers retain their value. Some skeptics have warned the race to build out AI infrastructure is creating a bubble that leans heavily on rapidly depreciating chips. Others have questioned whether AI companies can generate enough end-user revenue to justify the trillion-dollar bets. Those concerns haven't stopped Meta from investing heavily in infrastructure for AI compute. As of the end of the first quarter, Meta had committed to spending $182.9 billion on AI infrastructure in the coming years, including massive ongoing projects in Louisiana and Ohio. The Ohio project, which Zuckerberg said would be the size of Manhattan, is expected to come online this year. Unlike Google and OpenAI, Meta hasn't seen significant demand for its own AI models and services. Meta doesn't break out its revenue from Meta AI or from Llama, its open-weight AI model family in its earnings, and executives have mostly emphasized the internal corporate uses of AI in public statements. That could mean that Meta's AI endeavors don't yet represent a material standalone revenue line. To get a return on some of its own colossal spend, Meta may copy CoreWeave's business model and sell access to "raw" compute capacity, according to Bloomberg. The outlet also reported Meta is considering following AWS's lead and selling access to various AI models -- including its recently launched closed-weight model, Muse Spark -- hosted on its AI infrastructure. The new business line will be part of a new initiative reportedly dubbed Meta Compute, which is led by head of infrastructure Santosh Janardhan, Meta Superintelligence Labs leader Daniel Gross, and president Dina Powell McCormick. The report confirms Zuckerberg's May statements that a Meta cloud computing business is "definitely on the table" as a way to get a return on some of the massive investment into its strategy to develop AI "superintelligence." TechCrunch has reached out to Meta for comment.

Meta reportedly plans to rent out its AI compute, sending AI stocks tumbling -- 'Meta Compute' would put company in direct competition with AWS

The company that agreed to pay neoclouds roughly $48 billion for GPU capacity may soon compete with them. Meta is building a cloud business to sell excess AI computing capacity, according to a Bloomberg report that cites people familiar with the matter. The company is reportedly weighing two service models: selling developers access to AI models hosted on its own infrastructure, including its closed-weight Muse Spark model, in an arrangement similar to Amazon Web Services' Bedrock, or selling raw computing capacity in the same way neocloud providers such as CoreWeave do. The initiative is reportedly dubbed Meta Compute and is led by head of infrastructure Santosh Janardhan, Meta Superintelligence Labs leader Daniel Gross, and president Dina Powell McCormick. Either path would put Meta in direct competition with AWS, Google Cloud, and Microsoft Azure. Judging by Wednesday's trading, though, the market thinks the hyperscalers aren't the ones with the most to lose. Meta has been one of the neocloud sector's most important customers. The company expanded its cloud computing agreement with CoreWeave to $21 billion in April and has signed contracts worth up to $27 billion with Nebius, roughly $48 billion committed to renting other companies' GPUs because its own buildout couldn't keep pace with demand. Investors repriced that relationship within hours of the Bloomberg report. Meta shares rose more than 10%, the stock's biggest single-day gain in over five months, after a year in which it had fallen nearly 15% and lagged the S&P 500. CoreWeave fell 10.8%, and Nebius dropped 12.4%. "The impact of adding Meta's capacity to the market is more likely to be on neoclouds than the big hyperscalers. Those companies like CoreWeave and Nebius rely on Meta for their growth, and Meta may not need them anymore," Gil Luria, managing director at D.A. Davidson, told Reuters. The report didn't come out of nowhere. At Meta's shareholder meeting in May, CEO Mark Zuckerberg said entering cloud computing was "definitely on the table," adding that companies were approaching Meta "almost every week" to buy access to its AI models or spare computing power. Meta raised its full-year 2026 capex forecast to between $125 billion and $145 billion in April, citing higher component pricing and competition for land, power, and construction labor. The same week, Zuckerberg told employees that roughly 8,000 planned layoffs were a direct consequence of the company's infrastructure budget. That budget buys a heterogeneous fleet. Meta signed a 6 GW, $100 billion agreement with AMD in February, holds GPU deals with AMD and Nvidia worth roughly $110 billion combined, has announced four generations of its MTIA inference silicon, and struck a multi-billion-dollar Graviton deal with Amazon to cover general-purpose CPU shortfalls. Its Prometheus and Hyperion campuses are designed to scale to 1GW and up to 5GW, respectively. Capacity at that scale arrives in large, indivisible increments timed to demand projections, which is how a company that was rationed on Gemini access by Google and paid neoclouds tens of billions for GPU time can simultaneously find itself with surplus compute worth selling. We've seen a similar story with SpaceX. After xAI's infrastructure, the company leased the entire capacity of the Colossus 1 data center in Memphis, more than 300 MW, to Anthropic for around $1.25 billion per month through May 2029, and subsequently agreed to rent capacity to Google for roughly $920 million per month. Bloomberg Intelligence estimates the arrangements could generate more than $50 billion by 2028. Follow Tom's Hardware on Google News, or add us as a preferred source, to get our latest news, analysis, & reviews in your feeds.

Meta Exploring Option to Sell Spare Compute Capacity to Generate AI Revenue

Meta's next big adventure in AI will reportedly be selling access to extra compute power. As Bloomberg reports, the move would be part of a new cloud infrastructure business that would compete with established cash cows such as Amazon AWS, Microsoft Azure, and Google Cloud. Meta's been on a bit of a winding road lately. After CEO Mark Zuckerberg's grand plans for a metaverse sputtered, the company joined rivals Anthropic, Google, and OpenAI in spending billions on AI models that require intense amounts of compute power. Last fall, Zuckerberg estimated during a White House appearance that Meta would spend approximately $600 billion on AI through 2028. "If AI progress keeps accelerating, it's quite possible we'll invest even more," he added in a Threads post. Its models, however, haven't been part of the conversation as much as Claude, Gemini, or GPT. Following the disappointing launch of Llama 4 last year, Meta went on an AI hiring spree, spending tens of millions to poach people from its rivals. In April, it unveiled Muse Spark, part of a new family of models developed by Meta Superintelligence Labs. Selling excess compute power is something SpaceX is already doing via xAI. In May, Anthropic signed a deal to use xAI's Memphis Colossus 1 supercomputer, which "gives us access to more than 300 megawatts of new capacity (over 220,000 Nvidia GPUs) within the month," Anthropic said at the time. Google, meanwhile, is set to pay SpaceX $920 million per month in a new cloud services deal that will give it access to some of the space exploration company's compute capacity, including 110,000 Nvidia chips. SpaceX also signed a compute deal with AI coding platform developer Cursor, which it just acquired for $60 billion. So, there's certainly potential for Meta to pull in some serious cash from compute access, if it can stay focused. The company has dealt with reported morale issues lately amid major layoffs and efforts to track employees' computers to train its AI.

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 is reportedly building its own cloud business - Engadget

Selling server infrastructure would put Meta in competition with Amazon and Google. Meta could spin up its own cloud business to make use of the infrastructure investments it's made to train and run AI models, Bloomberg reports. The social media provider has traditionally paid for risky bets on smart glasses and virtual reality with the money it makes through its extensive online ad business. Selling cloud infrastructure would put Meta in direct competition with Amazon, Google and newly-minted cloud provider SpaceX. The cloud business could offer multiple services, according to the report, like selling access to AI models run on Meta's infrastructure, or leasing the computing power of its data centers to other companies looking to train AI. Offering something akin to Amazon Web Services could help make back some of what Meta has already spent on its new bet. As part of its AI plans, the company has committed to investing $600 billion in the US by 2028. Meta has also already made more than a few expensive hires to build its AI superintelligence team. Meta Compute, the data center and AI-focused initiative Meta created in January, is currently developing the new cloud business, according to Bloomberg. Engadget has contacted Meta for more information about its data center plans. We'll update this article if we hear back. At least so far, Meta has made accessing its Muse Spark AI model free for anyone using apps like Facebook, WhatsApp, Instagram or the standalone Meta AI app. Paying for a subscription just unlocks higher limits for generating images and access to more advanced reasoning. The company's new AI model will be integrated into wearables starting with the recently announced Meta Glasses, and like Google, Meta is also working on AI agents that can handle personal and professional tasks on a user's behalf.

Meta pops 8% as company makes cloud push to sell excess AI compute power capacity

Shares of Meta popped 8% on Wednesday on news that the company is building out a new cloud business that could help recoup some of the billions of dollars it's poured into artificial intelligence infrastructure. Meta will sell its excess computing power to outside customers, CNBC confirmed. Bloomberg was first to report the news. The company is debating whether it will offer access to AI models that are hosted on its infrastructure, or whether it will sell access to raw computing power, according to Bloomberg. A representative for Meta did not immediately respond to CNBC's request for comment. Model developers, including Meta, have been racing to secure computing power since OpenAI kickstarted the AI boom with the launch of its ChatGPT chatbot in 2022, and demand far outpaces supply. Meta told investors in April that it plans to spend as much as $145 billion on capex this year as it continues developing data centers and securing the graphics processing units needed to train AI models and run large workloads. By standing up a cloud business, Meta could generate revenue on the capacity it's not using, a welcome signal for some investors who have been uneasy about the company's spending plans. The new business would also throw Meta into a new and fiercely competitive market, which is dominated by companies including Amazon, Microsoft, Google and CoreWeave, among others. Meta is following the lead of Elon Musk's SpaceX, which has also started selling excess computing capacity this year. The company has inked lucrative deals with Anthropic, which has agreed to pay $1.25 billion per month for capacity, and Google, which has agreed to pay $920 million a month. Meta has been struggling to find its footing in the AI industry, even after spending $14 billion to bring in Alexandr Wang from Scale AI last year. The company debuted its first model under Wang's leadership, Muse Spark, in April, which it positioned as a "powerful foundation," not a state-of-the-art offiering.

Meta Goes the Way of xAI, Considers Renting Computing Power as Own Model Flails

You know the old adage: Those who can, do; those who can't, rent their space to those who can. According to a report from Bloomberg, Meta is considering getting into the cloud computing business, renting out its infrastructure to other companies that want access to computing power for their AI operations, as the company continues to struggle to get its own model to compete with the frontier labs. Per Bloomberg, Meta is exploring two primary potential arrangements for its prospective new business, which is apparently being called Meta Compute inside the company. One option would be to sell access to AI models hosted on Meta's own data center infrastructure. The other would be to sell "raw" compute capacity that other companies could then run their own models on. Gizmodo reached out to Meta for comment on its reported new business venture but did not receive a response at the time of publication. The move to potentially open up its infrastructure to others comes as Meta has struggled to get its own AI models off the ground. The company has repeatedly reorganized its AI division, thrown massive multi-million-dollar bags at researchers and experts, and laid off hundreds of people in an attempt to consolidate its focus on building AI models that could compete with the likes of OpenAI and Anthropic. None of it has been particularly successful. Earlier this year, the company released its new flagship model Muse Spark, and while it performed well enough in benchmark testing, it has struggled to gain any real traction. Meta's AI chief, Alexandr Wang, has recently called the model an "appetizer" for what Meta will have to offer. But at this point, there seems to be little reason to believe that is actually the case, rather than just marketing speak that covers up how far behind its competitors the company has fallen. That's not great for a company that has pledged about $145 billion in AI infrastructure spending this year alone, so it's no wonder Meta is looking at ways to squeeze some money out of all that investment. It seems it's looking to SpaceX and its folded-in AI firm, xAI, as a model. After it became clear that Grok simply wasn't competitive with frontier models at anything but generating non-consensual porn, the company pivoted to renting out its massive Colossus data center to Anthropic for it to run its AI model that's actually popular. Frankly, renting computing power is probably a better business to be in for the time being -- though it likely won't be fun to be left with all that server space if and when the bubble pops. But hey, that's a problem for a different quarter, no time to worry about the future when you're trying to figure out how to generate shareholder value now.

Meta wants to rent out its spare AI compute, and Wall Street likes the idea

A reported plan to sell surplus computing power would put Meta up against AWS, Google Cloud and Azure, and give investors a reason to look past its spending. Meta has spent two years buying every scrap of AI computing power it can lay hands on. Now it appears to be working out how to sell some of it back. Bloomberg reported on Wednesday, citing people familiar with the matter, that the company is building a cloud business to offload excess AI capacity, and investors treated the news as a small relief after months of anxiety about how much Meta is spending and what it will get for it. The plans are early and could still change, according to the report. What Meta is said to be weighing is the shape of the offering rather than whether to pursue it. One option is to sell access to AI models hosted on its own infrastructure, roughly the way Amazon's Bedrock works. The other is to sell raw computing capacity, the model that neocloud providers such as CoreWeave have built entire businesses on. Either path would put Meta head to head with Amazon Web Services, Google Cloud and Microsoft Azure, the three incumbents that dominate the market it would be entering. The effort is reportedly gathered under a new unit called Meta Compute, led by the company's head of infrastructure Santosh Janardhan alongside Meta Superintelligence Labs figure Daniel Gross and Meta president Dina Powell McCormick. The logic is straightforward enough. Meta has guided to capital spending of $115bn to $135bn in 2026, an enormous outlay on chips, land and power, and a cloud business is one of the few ways to turn idle capacity from that build-out into revenue instead of a sunk cost. The market read it that way immediately. Meta shares jumped more than 10% on the report, a sharp move for a stock that had been having a poor year, down close to 15% as of the day before and lagging the S&P 500 as investors questioned the pace of its AI outlay. A credible route to earning money back from the infrastructure, even a still-hypothetical one, was apparently enough to shift the mood. Meta would not be the first to spot the opportunity. SpaceX has been renting spare capacity from xAI's Memphis data centre to Anthropic, an arrangement Bloomberg Intelligence estimates could bring in more than $50bn by 2028 and $100bn by 2030. The pattern is becoming familiar across the industry: build far more compute than you can use today, on the bet that you will need it tomorrow, and rent out the surplus in the meantime to defray the bill. For Meta the surplus is real and growing. The company has a 2,250-acre hyperscale campus in Louisiana, a gigawatt-scale data centre under construction in the American Midwest, and a web of external deals layered on top, including new capacity from Crusoe worth roughly 1.6 gigawatts across two sites. That appetite has run into limits elsewhere, with Google recently rationing Meta's access to its Gemini models because it could not spare the compute. There is an irony in a company that has been scrambling for compute now positioning itself to sell it, and it points to how lumpy this build-out has become. Capacity arrives in enormous, indivisible chunks, timed to projections rather than current demand, which leaves even the hungriest buyers holding more than they can immediately use. Selling the overflow is how the neoclouds, and now apparently their customers, plan to make the arithmetic work. Deals like Jane Street's $6bn contract with CoreWeave show how much money is moving through that layer. For now it remains a report rather than a product. Meta has not confirmed the plan, no pricing or launch timing has surfaced, and the people describing it stress that the strategy could still shift. What is not in doubt is the incentive. When you have committed well over $100bn a year to infrastructure, finding buyers for whatever you are not using stops being a side project and starts looking like a necessity.

Meta reportedly wants to sell AI cloud compute out of U.S. data centers. In Saudi Arabia, it's that much cheaper | Fortune

Douglas's sharpest critique wasn't about Meta's strategy -- it was about the economics of building AI infrastructure in the U.S. at all, a dynamic he thinks investors are underpricing. "I think data center capacity in the United States is not going to age well," he said. "It's one of the most expensive places to build out that kind of capacity, and a lot of communities don't want it. I think literally two years from now, those data centers are not going to be very attractive." The competition, in his view, is coming from an unexpected direction: sovereign wealth-backed capacity in the Gulf. "The Kingdom of Saudi Arabia is coming online with massive data center capacity, hosted out of Saudi Arabia, at significantly lower prices -- because why pump oil out of the ground and ship it overseas in tankers when you can use it here to power massive data centers?" he said, citing Saudi Arabia's Public Investment Fund, one of the world's largest sovereign wealth funds. "If I were an investor, no way would I invest in companies building out hyperscaling in the United States right now." Douglas added that some Gulf data centers are being structured as legal extraterritorial zones -- effectively data "embassies" -- so multinational clients with strict data-residency rules can use them without technically moving data outside their home country. "People are focused on putting data centers in a cornfield in Indiana, where no one wants it and it's very expensive," he said. "Meanwhile, that story hasn't really been told." Does selling cloud even fit Meta's business? Set against that backdrop, Douglas said he was skeptical of the specific plan Bloomberg described -- selling excess AI compute the way AWS, Azure, and Google Cloud do. "It doesn't make a lot of sense unless you really want to put your name in the back of the AI space -- just basically get attention," he said. "Which the announcement is definitely doing. So part of me wonders: is that today's headline, but tomorrow's reality?" Douglas, who spent years as a coding engineer before founding a series of startups, said the plan echoes what SpaceX and xAI have done with their own data centers -- building capacity and renting it out to a small number of massive buyers, like Anthropic. That's a fundamentally different business than the one Meta is reportedly eyeing. "There's not many companies that can just take raw data center space and put it to use," Douglas said. "So there's a very limited number of customers for that. And if you're going to rent it like AWS -- well, now that's a very competitive market: AWS, Google Cloud, Azure." He was also skeptical that the pivot fits Meta's core business at all. "Going from three or four billion social media app users to 10 customers buying data center capacity from them -- that just doesn't seem like a good fit," Douglas said. "But again, we're sitting here talking about it, which maybe is the point." A pattern of swings Douglas argued the market's instinct to reward a well-known company for entering a new business -- Meta's stock rose on the report alone -- undersells how difficult that pivot actually is. "There's often this assumption that if a company that's successful in one area announces they're going to enter another area, that's an automatic success," he said. "It doesn't matter what size you're at -- it's really, really hard to build a new company from scratch, or a new product line, or new revenue, even when there's proven product-market fit. Meta's been prolific in going after areas like this -- Threads being one example -- and they just keep running into it." Part of the problem, he said, is talent -- "the talent that knows how to build something from scratch usually doesn't work for a big company like Meta. They're usually building their own startups." Meta's ads business Despite his skepticism about the cloud pivot specifically, Douglas said he remains bullish on Meta's broader AI strategy -- particularly its open-source models -- and what it means for advertising, even as investors have grown anxious about whether the spending is paying off. "I'm actually pretty bullish long-term on Meta in terms of AI models and Llama overall," he said. "I think Meta has the capital, the desire, and the ability to recruit to ultimately do quite well -- especially since they're building and training those models on massive amounts of data and are motivated to make them available at attractive prices. That's going to benefit their ads business, and it's going to benefit the ads business generally." Douglas said MNTN is already in conversations with AI companies about partnering on advertising-specific models for targeting. He also pushed back on the idea that better ad-targeting AI is bad for consumers. "Consumers pay for everything -- companies pay for nothing unless they're not profitable," he said. "The better these models can predict who wants to buy what, the lower the cost of the products are. If you make marketing more efficient, that goes back to the consumer in lower prices." As for whether a compute-selling business makes Meta look more like Amazon or Microsoft -- diversified infrastructure players less reliant on advertising -- Douglas said that framing gets it backwards. "People believe this year Meta will become the world's largest advertising company. They're already the world's largest social media company," he said, noting the technical feat of inferring user intent from behavior rather than search queries, the way Google does. "Taking a detour toward AI infrastructure -- I think it is a detour. It's not a major strategic move. It's a tactical move. And all tactical moves have a beginning and an end. I think this one probably would too, if it comes to fruition."

Meta shares surge on report of new AI cloud business

Shares of Meta Platforms jumped more than 6% on Wall Street on Wednesday after a report said the social media giant is preparing to launch a cloud computing business that would sell AI computing power to outside customers. The report, published by Bloomberg, said Meta is developing plans to compete directly with Amazon Web Services, Microsoft Azure and Google Cloud by monetizing the excess computing capacity it has built up while racing to develop artificial intelligence. The company would also sell its own internally designed AI models to business customers for their own uses -- a major emerging market for the cloud computing giants. Meta has poured hundreds of billions of dollars into data centers and AI chips as it pursues what CEO Mark Zuckerberg has called "superintelligence," spending that has fueled investor concerns about how the company will generate returns. The company, which has struck major computing deals with CoreWeave, Google and Oracle, had seen its share price lose ground in recent months because of concerns about overspending on AI. Zuckerberg has previously signaled openness to selling excess computing capacity or launching a service that would charge business customers for AI usage measured in tokens. "It's definitely on the table," Zuckerberg told shareholders on an earnings call in May. Rival Elon Musk's SpaceX -- which includes his AI startup xAI -- ahead of an IPO last month began renting capacity from its Memphis data center to Anthropic and struck a deal with Google. The moves could bring in tens of billions of dollars in revenue and help reassure investors as spending on AI infrastructure becomes an increasing source of worry, with returns on investment not near the levels needed to break even. In the race to lead in AI, Meta has lagged behind Google, OpenAI and Anthropic, with the company's own models, often delayed, proving disappointing. Zuckerberg invested more than $14 billion last year in Scale AI, a San Francisco-based startup, and poached its CEO, Alexandr Wang -- who was 28 at the time -- to run the AI lab inside Meta. He has also poached top talent from his competitors.

'Meta will need to reduce or possibly stop AI investment in datacenters, as it already has excess capacity': The AI infrastructure bubble feels the heat

As a PC gamer, you'll be all too familiar with the sky-high prices of memory and storage components. To put it most simply, these frankly eye-watering price tags are largely due to big tech's major players buying up as much DRAM and flash chips as possible in order to fuel their AI ambitions. Well, that strategy may have backfired as some are now trying to figure out what to do with an excess of compute capacity. Meta is moving into the cloud business in order to sell off its glut of AI compute capacity, according to Bloomberg this week. The plan is in its earliest phase, with those close to the matter claiming the company is still considering its approach. One idea reportedly being considered is to sell access to AI models already hosted on Meta's existing infrastructure, à la Amazon Web Services' Bedrock. In other words, developers would pay to access AI models like Muse Spark running from Meta's own hardware. Apparently, another plan is to skip the model middleman and simply sell Meta's 'raw' compute power. Zuckerberg said during Meta's annual shareholder meeting back in May that moving into the cloud business was "definitely on the table." In response to an investor question, he claimed that there's already demand from other companies to "stand up an API service" or asking to buy compute from Meta "at some premium." However, Zuckerberg then went on to clarify, "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." Investors are getting increasingly anxious about seeing a return on AI investments. With the company's full-year capital expenditure projections blowing past $140 billion, it's not hard to see why. Meta's shares saw a plunge back in April, so selling off compute would be one way to reassure investors. It's worth noting Meta hasn't committed to any one plan yet, and its strategy may change significantly, but the company's share value did jump up 9.3% to $615.55 on Wednesday, which Bloomberg describes as "the biggest intraday gain since April". Damir Tokic of Seeking Alpha argues that this may not actually be good news for Meta. First, he highlights that Meta's revenue is highly dependent on advertising across all of its platforms, and that it started building out AI infrastructure to better support this revenue stream. He elaborates, "Meta is unlikely to continue investing in AI infrastructure with the specific aim to rent it -- it likely means that Meta will need to reduce or possibly stop AI investment in datacenters, as it already has excess capacity. Further, Meta would have to increase debt to continue AI capex, and it already borrowed around 20B in 2025 and 2026, with operating cash flows dangerously decreasing." It's also not just Meta potentially going down the route of selling compute capacity, either. SpaceX acquired Elon Musk's xAI back in February and has since started renting out its own excess compute capacity to Anthropic. Renting out your extra capacity is all well and good, but it's a strategy that may become less viable over time if competitors start to also realise they've overinvested and the wider industry starts to even more closely resemble a snake eating its own tail. In other words, if the AI bubble hasn't yet burst, it's certainly looking strained.

Meta shares jump 9% on reported plan to offer AI infrastructure services

Meta shares jump 9% on reported plan to offer AI infrastructure services Meta Platforms Inc. reportedly plans to rent its artificial intelligence infrastructure to other companies. Sources told Bloomberg and CNBC today that the Facebook parent will sell excess capacity not used by its internal workloads. The news sent Meta's shares 8.8% higher, while AI cloud provider CoreWeave Holdings Inc. closed 13.9% lower. Nebius Group NV, a competing provider of machine learning infrastructure, dropped 17%. Meta could potentially make a significant amount of new computing capacity available for the AI industry. The company expects to spend up to $145 billion on capital expenses, a line item that covers data centers, in its current fiscal year. That's on top of the $70 billion it invested in 2025. Meta's flagship infrastructure project is a data center campus called Hyperion that is currently undergoing construction in Louisiana. The site is expected to consume 5 gigawatts of electricity, which is enough to power more than 4 million homes. It will host 11 buildings equipped with millions of graphics processing units. AI infrastructure providers such as CoreWeave offer GPUs from multiple chipmakers. It's possible that Meta will take a similar approach. Earlier this year, the company agreed to purchase millions of AI chips from Nvidia Corp., Advanced Micro Devices Inc. and Google LLC. It's unclear how Meta's entry into the cloud market might affect its partnership with the Alphabet Inc. unit. The social media giant's planned cloud service may also provide access to its internally developed chips. In March, Meta debuted an inference accelerator called the MTIA 300 that offers 1.2 petaflops of MX8 performance. Next year, the company will start using a more advanced chip that is expected to be about 8 times faster. Bloomberg reported that Meta is still weighing how to monetize its infrastructure. According to the publication, the company could sell computing capacity or offer access to hosted AI models. That raises the possibility Meta will make its internally developed large language models available to developers. The company's flagship LLM, Muse Spark, launched in April. Meta uses the model to power a consumer-focused chatbot service, but it demonstrated competitive performance across several knowledge work benchmarks. As a result, Muse Spark may be suitable for the enterprise use case Meta will presumably prioritize with its cloud service. If the company launches a series of AI infrastructure offerings and hosted models, it may also decide to enter the training tooling market. Meta overhauled its internal tooling stack to speed up the development of Muse Spark. According to the company, the new stack can achieve the same performance as its previous one using an order of magnitude less infrastructure. SpaceX Corp.'s xAI unit is also making its excess data center capacity available to other companies. It recently inked infrastructure contracts with Google and Anthropic PBC that are together worth $2.35 billion per month.

Meta is planning a cloud business to sell AI computing power

Meta Platforms is developing plans for a cloud infrastructure business that will sell access to AI computing power and models, setting up a new vector of competition with industry leaders like Amazon Web Services, Microsoft Azure and Google Cloud. Meta, which has been rushing to secure expensive data centres and other infrastructure to fuel its own artificial intelligence ambitions, is forming a business to generate revenue from excess computing power sold to outside customers, according to people familiar with the matter, who asked not to be named as the details aren't public.

Meta Is Looking to Launch a Cloud Computing Business. Its Stock Is Popping

Get personalized, AI-powered answers built on 27+ years of trusted expertise. Meta's stock is soaring on signs it could be on the verge of launching a new business. Meta Platforms (META) shares were up 10% recently, making it one of the best-performing stocks in the S&P 500 Wednesday, following a report that it aims to launch a cloud computing business. Meta has created an internal initiative called "Meta Compute" to manage the massive amounts of compute the company is acquiring, and is considering selling excess capacity, according to a Bloomberg report. The social media giant is also considering building a business selling access to AI models from several companies hosted through its existing AI infrastructure, akin to Amazon Web Services' offerings through the Bedrock platform, Bloomberg reported. Meta declined to comment on the report. Such an operation could bring the Facebook and Instagram parent in competition with cloud services from Alphabet's (GOOGL) Google Cloud, Microsoft's (MSFT) Azure, and Amazon's (AMZN) AWS. Meta CEO Mark Zuckerberg said at Meta's annual investor day back in May that "almost every week" Meta's partners ask them about a business to sell compute or model access. At the time, he said Meta had not yet pursued selling its compute because the company expected to have a use for all of it, but said it could be an option if Meta gets to "a point where we feel that we have overbuilt," per an AlphaSense transcript. Shares of so-called "neocloud" companies CoreWeave (CRWV) and Nebius Group (NBIS) tumbled to lead decliners in the Nasdaq 100 following the news, dropping about 11% and 14%, respectively. Even with Wednesday's rally, Meta shares are down about 6% year-to-date, after a slump amid concerns about its AI progress and the scale of its investments.

Why Nebius and CoreWeave stocks tumbled after Meta's AI cloud plans - ​AI Cloud Stocks Hit by Meta Shock

Why Nebius & CoreWeave stocks tumbled after Meta's AI cloud plans 1/8 AI Cloud Stocks Hit by Meta Shock Shares of AI cloud infrastructure providers Nebius and CoreWeave came under heavy selling pressure after reports suggested Meta Platforms is planning to launch a commercial AI cloud business. Investors fear the social media giant could become a powerful new competitor in the fast-growing AI infrastructure market. (Sources: Barron's, Reuters, Investing.com) 2/8 What Is Meta Planning? According to reports, Meta is exploring a business that would allow external customers to rent AI computing power and access its AI models. The company is also evaluating the sale of raw computing capacity, a move that would place it in direct competition with specialist AI cloud providers. 3/8 Why Investors Panicked The concern isn't just another competitor entering the market. Meta is already one of the biggest customers for AI infrastructure providers. If it begins monetising its own computing resources, investors worry it could rely less on third-party providers such as CoreWeave and Nebius while simultaneously competing against them. 4/8 Nebius Suffers the Biggest Blow Nebius shares plunged as much as 17%, marking one of the stock's steepest single-day declines. The selloff reflected concerns that future revenue growth could come under pressure if hyperscalers increasingly build and commercialise their own AI infrastructure instead of outsourcing demand. 5/8 CoreWeave Also Slides CoreWeave shares fell sharply as investors reassessed the company's long-term competitive position. Although demand for AI computing remains strong, the possibility of Meta entering the cloud market raised fresh questions about pricing power and customer concentration risks. 6/8 Analysts See a Structural Risk Market watchers say the biggest risk is that today's largest AI customers could become tomorrow's largest rivals. As hyperscalers build massive AI infrastructure for internal use, they may eventually commercialise excess capacity, creating tougher competition for independent AI cloud providers. 7/8 Not Everyone Is Bearish Some analysts argue the selloff may be overdone. They believe demand for AI computing continues to outstrip supply, and Meta's move could actually validate the enormous opportunity in AI infrastructure rather than diminish it. Several brokerages maintained bullish ratings on CoreWeave despite the sharp decline. 8/8 Bigger Picture for AI Infrastructure The episode highlights how quickly the AI infrastructure landscape is evolving. As technology giants invest hundreds of billions of dollars into data centres and AI chips, independent cloud providers will need to differentiate through scale, specialised services and customer relationships to sustain growth.

Meta's Potential AI Cloud Business Could Drive Higher Capex to Build Out Infrastructure, BofA Says - Meta

The report follows statements from Meta's annual shareholder meeting, where CEO Mark Zuckerberg indicated potential enterprise opportunities. * Meta Platforms shares are sliding. What's behind META decline? In a research note released on Thursday, BofA Securities analyst Justin Post maintained a Buy rating and an $835 price forecast on Meta, noting that enterprise sales could provide greater visibility into the value of the company's AI capacity. The Bull Case For AI Capacity Monetization Zuckerberg indicated that the company can sell capacity at rates above the cost to build. According to Post, an infrastructure or model API business launch could underscore the underlying value of Meta's capacity assets and model development. "More broadly, Meta is building a strategically valuable asset at a time when global AI capacity remains scarce," Post wrote. Wall Street expects Meta to incur a cumulative capital expenditure of approximately $850 billion between 2026 and 2030. Assuming an average cost of $45 billion per gigawatt (GW), this implies roughly 19GW of capacity. If Meta monetizes 50% of this capacity externally at $10 billion to $15 billion in revenue per GW, it represents an incremental revenue potential between $100 billion and $150 billion. The Bear Case and Structural Risks A more cautious interpretation suggests that external compute leasing could serve as a fallback plan, raising questions about whether internal use cases for the added capacity are developing according to plan. BofA Securities also flagged risks that Meta might increase investments to build the infrastructure business or reset expectations during the second-quarter earnings call. Why Is Meta Falling on Thursday? Meta stock fell roughly 4% on Thursday morning due to investor anxiety over massive projected capital expenditures required for its newly rumored AI cloud computing business, alongside natural profit-taking following an 8.8% surge the previous day. META Stock Price Activity: Meta Platforms shares were down 4.30% at $586.53 at the time of publication on Thursday, according to Benzinga Pro data. 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.

Meta stock: Why are Facebook, Instagram, WhatsApp shares are rising today at U. S Stock Market?

Meta has poured hundreds of billions of dollars into data centers and AI chips. Meta stock jumped more than six percent on Wall Street Wednesday after a report said the social media giant is preparing to launch a cloud computing business that would sell AI computing power to outside customers. The report, published by Bloomberg, said Meta is developing plans to compete directly with Amazon Web Services, Microsoft Azure and Google Cloud by monetizing the excess computing capacity it has built up while racing to develop artificial intelligence. The company would also sell its own internally designed AI models to business customers for their own uses -- a major emerging market for the cloud computing giants. Meta has poured hundreds of billions of dollars into data centers and AI chips as it pursues what CEO Mark Zuckerberg has called "superintelligence," spending that has fueled investor concerns about how the company will generate returns. The company, which has struck major computing deals with CoreWeave, Google and Oracle, had seen its share price lose ground in recent months due to the AI overspending concerns. Zuckerberg has previously signaled openness to selling excess computing capacity or launching a service that would charge business customers for AI usage measured in tokens. "It's definitely on the table," Zuckerberg told shareholders on an earnings call in May. Rival Elon Musk's SpaceX -- which includes his AI startup xAI -- ahead of an IPO last month began renting capacity from its Memphis data center to Anthropic and struck a deal with Google. The moves could bring in tens of billions of dollars in revenue and help reassure investors as spending on AI infrastructure becomes an increasing source of worry, with returns on investment not near the levels needed to break even. In the race to lead on AI, Meta has lagged behind Google, OpenAI and Anthropic, with the company's own models, often delayed, proving disappointing. Zuckerberg invested over $14 billion last year into Scale AI, a San Francisco-based startup, and poached its CEO Alexandr Wang -- who was 28 years old at the time -- to run the AI lab inside Meta. He has also poached top talent from his competitors.

Meta Plans Cloud Business to Take on Big Tech Rivals | PYMNTS.com

That's according to a report Wednesday (July 1) by Bloomberg News, which says this move would put Meta in greater competition with cloud leaders such as Amazon Web Services, Google Cloud and Microsoft Azure. Already scrambling to secure the infrastructure for its own artificial intelligence (AI) projects, Meta is now forming a business to derive revenue from surplus computing power sold to outside customers, sources familiar with matter told Bloomberg. PYMNTS has contacted Meta for comment but has not yet gotten a reply. According to the Bloomberg report, the sources say one possible plan would involve offering access to various AI models hosted on Meta's existing AI infrastructure, similar to what AWS does with its Bedrock. Meta would run the data centers and chips powering the models, charging developers to access them. In addition, Meta is also weighing a plan to sell access to "raw" computing capacity, similar to what "neocloud businesses" like CoreWeave offer, the sources said. The project falls under the umbrella of Meta Compute, an in-house initiative to develop and oversee the company's AI infrastructure efforts, one of the sources said. In other artificial intelligence news, PYMNTS wrote last about the price adjustments Meta and other tech giants are making amid slowing consumer and enterprise usage. "The consumer price cuts sit alongside a structural problem. Anthropic's $200 Claude Code plan gives developers 20 times the usage of its base tier," that report said. "Power users on that plan can consume the equivalent of $600 to $1,500 worth of API-priced compute for a flat monthly fee ..." PYMNTS added. "AI companies are cutting prices at the consumer level while absorbing the cost of heavy usage at the same time." Meta's decision to start offering paid subscriptions "sharpens the competitive picture," that report added. The Facebook owner has spent decades expanding on an ad-supported, free-access model. Testing a paid AI tier indicates that even it sees limits to what advertising can fund on its own. As covered here, Meta is also considering a $199.99 premium tier for its Hatch AI agent, which would place it directly alongside Anthropic and OpenAI at the peak of the market. Research from PYMNTS Intelligence shows that more than 60% of American consumers used dedicated AI platforms in the past year. Among Gen Z and power users, use of dedicated AI platforms as a first stop for everyday tasks climbed 36% and 28% in one month. "That acceleration in usage is exactly what makes flat-rate consumer pricing difficult to sustain," PYMNTS wrote.

Meta Stock Surge: Why META Jumped 9% on Cloud Business - Meta Platforms (NASDAQ:META)

It would sell access to its AI computing power and proprietary models to external customers. The move is more than a product launch, in my opinion it is a fundamental reframing of what Meta is. Why the Meta Stock Surge Makes Strategic Sense The bear case was straightforward: Meta was spending like AWS, but monetizing like a social network. Indeed, today's Bloomberg report directly addresses that concern. By selling compute to third parties, Meta converts its data centers into a recurring revenue stream. Moreover, this puts Meta in direct competition with AWS, Microsoft Azure, and Google Cloud. This isn't entirely a surprise because at Meta's annual shareholder meeting in late May, CEO Mark Zuckerberg noted that selling excess compute capacity was "definitely on the table". Today's reporting suggests those plans have since taken concrete shape. Why the Market is Reacting Now The timing matters here. META had been under meaningful pressure heading into today's session. On June 29, a federal judge denied Meta's bid to dismiss a multi-state child addiction lawsuit, adding legal overhang to an already difficult June for the stock. During the month-long selloff, more than seven of the largest companies lost over $2 trillion in market capitalization. META itself is down approximately 15% from its highs in the first half of 2026. As a result, today's cloud announcement is changing the mood. The Fundamentals Behind the Move Meta's underlying business remains strong. In Q1 2026, the company reported earnings per share of $10.44, well ahead of consensus estimates of approximately $8.20. Net income reached $22.8 billion, supported by fast advertising monetization driven by AI-enhanced targeting across Facebook, Instagram, and Reels. It's worth noting that Q1 net income was partially inflated by a one-time tax benefit of $8.03 billion. Stripping that out, diluted EPS would have been approximately $3.13 lower (a detail worth keeping in mind when modeling forward quarters). More than 8 million advertisers now use at least one of Meta's AI tools for content creation. A video-generation tool showed a 3% improvement in conversion rates in large-scale testing. Advertising revenue growth continues to be the engine and AI is making that engine more efficient. Looking ahead, management forecasts second-quarter 2026 revenue of $58 billion to $61 billion, implying continued double-digit growth despite the high comparative base. Is the Meta Stock Surge Justified? What today's report signals is that Meta is attempting a strategic repositioning: from a consumer social media platform with AI infrastructure costs, to a diversified technology company with consumer, advertising, and enterprise cloud revenue streams. Of 55 Wall Street analysts tracked across major platforms, 43 currently rate META a Strong Buy, with consensus price targets ranging from $825 to $880 ( a meaningful upside from current levels). A subset of more bullish estimates reaches $1,086. The risk factors remain real: the child addiction lawsuit overhang, Google's reported limits on Meta's access to Gemini models, potential regulatory action on kids' social media use, and the sheer execution risk of entering a cloud market dominated by entrenched hyperscalers. But for a stock that, according to most discounted cash flow models, entered today's trading session trading below its intrinsic value, the pivot to cloud computing opens a new chapter in the bullish scenario and the market is pricing it in. Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy. Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

CoreWeave stock sinks as Meta enters cloud business

Shares of CoreWeave took a hard hit after news broke that Meta Platforms is building a cloud business to sell spare AI computing power. The tech stock fell sharply over two trading sessions last week, and is currently valued at a market cap of $64.4 billion. Notably, Meta (META) is one of CoreWeave's (CRWV) biggest customers. The two companies, who were partners last month, are now competing in a rapidly expanding market. Meta's move rattles CoreWeave investors According to CNBC, Meta will sell its unused computing power to other enterprises, a plan first reported by Bloomberg. As per a CNBC report: * Meta is still deciding whether to offer full access to AI models running on its servers or simply rent out raw computing power to other companies. * Meta has not publicly confirmed the plan. Still, Meta CEO Mark Zuckerberg hinted at this possibility months ago. * He told investors during the company's Q3 earnings call that a move into cloud services was "on the table." * He repeated that message at Meta's annual shareholder meeting in May, saying that if the company ends up with more AI infrastructure than it needs, "that is an option that we have." * Meta plans to spend up to $145 billion this year building data centers and buying graphics processing units (GPUs) needed to train and run AI models. Turning unused capacity into a new revenue stream would ease pressure on that massive spending, pushing Meta stock higher following the news. Meta is following a path Elon Musk's SpaceX already took this year by selling extra computing capacity. SpaceX has struck deals with Anthropic, which pays $1.25 billion a month for capacity, and Google, which pays $920 million a month, per CNBC. What it means for CoreWeave's business model According to Reuters, Meta is one of CoreWeave's largest customers, with a total contract commitment of around $35 billion, including a $21 billion deal that runs through December 2032. Meta could either host AI models that developers pay to use or sell GPU access directly. If it hosts AI models, the tech giant primarily competes with software services. However, if Meta sells GPU access, it would compete with CoreWeave and peers such as Nebius. CoreWeave is part of the neocloud market, which is growing rapidly. A research report from Mordor Intelligence projects the total addressable market to expand from $24 billion in 205 to $236.5 billion in 2031, indicating a compounded annual growth rate of over 45%. In Q1 of 2026, CoreWeave more than doubled its revenue, which indicates it is outpacing broader industry growth and gaining market share. Michael Intrator, CoreWeave CEO stated: "Q1 was a transformational quarter for CoreWeave. We delivered our strongest quarter for customer bookings, signing more than $40 billion of new commitments and growing contracted revenue backlog to nearly $100 billion." Analysts tracking CoreWeave stock forecast revenue to increase from $5.13 billion in 2025 to $82 billion in 2030, representing a 74% CAGR. Even if Meta enters the GPU access market, CoreWeave has enough room to keep growing over the next decade. Tom Williams/Getty Images CoreWeave executives have downplayed the threat before CoreWeave leadership has addressed competition worries at investor conferences this year, before the Meta cloud news broke. Speaking at Bank of America's Global Technology Conference in June, CoreWeave Chief Strategy Officer Nicholas Robbins said hyperscalers like Microsoft have told him they eventually plan to build all their AI capacity in-house. He said the risk is "highly limited," noting that Microsoft accounted for 85% of CoreWeave's revenue backlog at its IPO but is no longer even its largest customer. At JPMorgan's Global Technology conference in May, CoreWeave Chief Development Officer Brannin McBee addressed a similar deal involving Blackstone and Google building out TPU cloud capacity. He called it "yet another demand signal" for AI infrastructure rather than a threat, adding that CoreWeave's clients specifically ask for Nvidia GPUs, not the chip architecture other cloud providers are building around. McBee also cautioned that signing up power and land does not automatically translate into revenue. He said building and operating GPU infrastructure at scale is "intensely difficult," and that CoreWeave's software platform, called Mission Control, is what allows it actually to deliver billable computing hours rather than just promises. Is CRWV stock undervalued? CoreWeave still carries real financial risk. The company holds close to $25 billion in long-term debt and leases against under $4.8 billion in stockholder equity, and it continues to post net losses as it builds out infrastructure. The company is still unprofitable and is forecast to report a cumulative free cash outflow of over $80 billion through 2030. Valued at a price-to-sales (2026) ratio of five times, CoreWeave is not too expensive given its growth estimates. Out of the 24 analysts covering CoreWeave stock, 14 recommend "Buy", nine recommend "Hold," and one recommends "Sell". The average CoreWeave stock price target is $132, indicating 62% upside from current levels. Whether Meta becomes a true rival or stays a customer that occasionally resells spare capacity, the AI infrastructure race is far from settled. For now, CoreWeave's executives are betting that scale, technology, and its relationship with Nvidia will keep it ahead of the pack. The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc. This story was originally published July 7, 2026 at 2:33 PM.

US Stocks: Meta building cloud business to sell AI computing, says report; shares rise

Meta Platforms is reportedly exploring a move into the cloud computing business, aiming to lease out its surplus AI computing power. This strategic shift could lessen Meta's dependence on advertising revenue and position it as a competitor to tech giants like Amazon and Microsoft. 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. US MarketsPowered By As on 01 Jul 2026, 01:30 AM IST S&P 500 Top Gainers Axon Enterprise560.61(9.79%) KLA301.71(8.38%) Air Products293.18(8.04%) Advanced Micro Devices580.91(7.68%) Gainers" S&P 500 Top Losers Coterra Energy32.56(-8.62%) Digital Realty Trust179.58(-5.77%) Hormel Foods24.82(-5.66%) Zimmer Biomet Holdings86.09(-5.64%) Losers" 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."

Meta's next AI bet has one major catch for investors

Meta Platforms (META) has spent much of the artificial intelligence boom asking investors to trust the bill. But now Wall Street might finally be getting a clearer answer on how Mark Zuckerberg plans to turn that spending into revenue. Meta is establishing a cloud business to sell spare AI computing capacity, Reuters reported. The business might offer developers access to Meta's AI models or let clients purchase raw computing power, bringing Meta closer to the AI infrastructure market currently controlled by cloud giants and newer compute providers. That's a big change for a corporation that still derives the bulk of its profit from digital ads. Meta reported first-quarter revenue of $56.31 billion, $55.02 billion of which was from advertising. Its operating margin was 41%, a level few large technology companies can match. So investors liked the cloud idea, but they may not be able to overlook the cost. A cloud business might help Meta monetize its enormous AI and data-center buildout. But it also risks pulling the business into the lower-margin infrastructure market, where the economics are fundamentally different from Facebook and Instagram marketing. Meta shares were recently trading at $582.90, giving the Facebook and Instagram parent a market capitalization of nearly $1.49 trillion. Meta stock gets a new AI revenue story The timing is important. Meta has been spending big on AI infrastructure, processors and data centers, but investors want to know when that will translate into revenue. The company stated capital expenditures, including principal payments on finance leases, were $19.84 billion for the first quarter. Meta also revised its 2026 capital expenditure outlook to between $125 billion and $145 billion, pointing to greater component prices and more data-center expenditures linked to future capacity. Investors are more comfortable with that type of spending when there's a clear revenue stream tied to it. A cloud business could provide one. If Meta has more AI computing capacity than it needs for its models, ad tools, and consumer apps, selling that capacity to outside developers could make the buildout appear less like an unchecked cost and more like a platform business. The idea also answers a broader strategic question for Meta. Most of the AI reward for Meta has so far been inside the advertising machine. AI helps enhance targeting, ad production and engagement across Facebook, Instagram and WhatsApp. That's helpful, but it doesn't fully address the investor issue that Meta is spending tens of billions of dollars on infrastructure without building a new separate business. Cloud computing could change that story. Meta's cloud push could pressure margins The catch is that cloud revenue is not ad revenue. Meta's advertising business is unusually successful as the firm already owns the platforms, the audience and the auction system that sells ad space. Cloud computing is another story because it takes massive infrastructure investments, enterprise clients, sales teams, service agreements, technical support, and ongoing investment in chips and data centers. Alphabet (GOOGL) shows the contrast. Google Services had $89.64 billion in sales and $40.59 billion of operating income in the first quarter. Google Cloud revenue was $20.03 billion, while operating income was $6.6 billion. Key takeaways from Meta's cloud push * Meta is reportedly building a cloud business to sell excess AI computing capacity. * The move could help Meta monetize its heavy AI and data-center spending. * Meta raised its 2026 capital-expenditure forecast to $125 billion to $145 billion. * Advertising still accounted for nearly all of Meta's first-quarter revenue. * Cloud computing could diversify revenue, but it may come with lower margins. * Alphabet's results show cloud can be profitable, but the economics differ from ads. * The investor question is whether Meta is selling spare capacity or entering a lower-margin infrastructure fight. Google Cloud is a great business. It's a fast-growing business that is profitable presently. But its profit profile is still distinct from the ad-heavy Google Services company. That's the problem Meta investors may have to start pricing in if cloud is to become a big part of the company's future. Meta isn't concerned about whether cloud computing can make money. The worry is that such revenue may compromise the margin profile that made Meta one of the most lucrative firms in tech. Meta could put pressure on AI cloud stocks Meta is not going to be the next Amazon Web Services overnight. The more probable short-term course is more constricted: the sale of AI-specific processing capacity to developers and enterprises that need access to costly infrastructure. That places the company in closer proximity to the world of AI-centric cloud vendors like CoreWeave (CRWV) and Nebius Group (NBIS) and not a full-service cloud behemoth. The rumored Meta plan might put the company in competition with CoreWeave and Nebius, Reuters said. That is why the report is significant outside Meta. CoreWeave shares were last at $81.75, giving the business a market capitalization of around $43.1 billion. Nebius was currently trading at $215.62. Meta has one advantage those companies do not. Cloud does not have to be the whole story. The same infrastructure may be leveraged by the corporation for its own AI models, ad products, and recommendation systems, as well as Meta AI, Instagram, Facebook and WhatsApp. Meta can offload any spare capacity. And if internal demand increases, Meta can consume more of it. It's that flexibility that makes the strategy particularly compelling. It also makes the margin question harder. COM & O / Getty Images Meta's cloud push gives Wall Street what it wanted: a potential revenue stream directly tied to the company's AI spending. But it also means investors have something fresh to worry about. Meta's core ad business is asset-light relative to cloud infrastructure. Selling processing power would help justify the AI buildout, but it could also make Meta seem more like a capital-intensive infrastructure business on the fringes. This is the true trade-off. It could be a sensible approach to get more out of spending what it was already going to make if Meta can sell off idle AI capability without developing a large cloud operation. If the company dives deeper into enterprise cloud, investors may have to accept a business with more revenue diversification but lower margins. For now, Wall Street is a fan. The next test is whether Meta can demonstrate that cloud computing is not simply a smart answer to AI spending concerns but a business that can increase revenue without eroding the profit profile that made the stock so attractive in the first place. The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc. This story was originally published July 4, 2026 at 2:47 PM.

Meta Could Crash the Neocloud Party, Analyst Says - Meta Platforms (NASDAQ:META)

Nasdaq futures are down 0.15% while S&P 500 futures have gained 0.07%. The quiet trading followed a strong Wednesday session where Meta shares closed nearly 9% higher. The market movement follows reports that the Facebook parent is developing an internal initiative called "Meta Compute." The program aims to generate revenue from excess AI computing capacity by renting raw compute to external businesses. Similarly, rival neocloud platform Nebius Group N.V. (NASDAQ:NBIS) saw its stock plummet 17.01% as investors processed the competitive threat. Meta's AI Compute Opportunity Meta could generate $10 billion to $20 billion in incremental annual revenue by selling excess AI computing capacity, according to Evercore ISI analyst Mark Mahaney. Speaking with CNBC on Wednesday, Mahaney said the most bullish interpretation is that Meta already has excess compute capacity, reducing the need for further sharp increases in capital spending while creating a new high-margin revenue opportunity. If successful, Meta could leverage its scale to compete with specialized AI infrastructure providers while generating a lucrative new revenue stream from assets it has already built. Mahaney also said investors are underestimating Meta's AI opportunity beyond advertising. He pointed to the company's large base of small businesses using WhatsApp and Instagram, where AI-powered business tools could become another long-term growth driver. Meta Technical Picture Remains Mixed Meta continues to trade above its short-term trend indicators, suggesting near-term buying interest remains intact. The stock is trading 6.3% above its 20-day simple moving average of $578.70 and 1.3% above its 50-day simple moving average of $606.95. However, it remains 0.6% below its 100-day simple moving average of $618.41 and 5% below its 200-day simple moving average of $647.42. The longer-term setup remains cautious. The 20-day moving average is below the 50-day moving average, while the 50-day remains below the 200-day moving average. That "death cross," which formed in December 2025, continues to signal a weak long-term trend despite recent stabilization. Momentum indicators have improved. The moving average convergence divergence (MACD) remains above its signal line, with a positive histogram, suggesting bullish momentum is building after the previous decline. Technical traders are watching resistance near $625, with the 100-day moving average just below that level. Support is seen around $595, close to the 50-day exponential moving average. META Stock Price Activity: Meta Platforms shares were trading up 0.21% at $614.20 during premarket trading on Thursday, according to Benzinga Pro data. Image via Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Meta shares jump 10% after reports company is selling excess AI computing power

Meta shares jumped nearly 10% Wednesday following a report the company is planning to sell excess computing power, allowing it to recover some of the billions of dollars it has sunk into AI. The Menlo Park, Calif.-based tech giant, which has rushed to secure pricey data centers and chips, is building a new cloud business to sell access to its AI models and compute, according to Bloomberg. It's welcome news for investors, who have grown anxious over whether Meta will be able to deliver returns on the hundreds of billions of dollars it has spent to build up a trove of coveted computing power, with a goal of developing "superintelligence." Meta declined to comment. The new cloud business would allow Meta to generate revenue on any leftover capacity, while setting it up to compete with industry leaders like Amazon, Microsoft, Google, CoreWeave and SpaceX. Meta is debating whether the cloud business should be structured to sell access to its own AI models, or to raw computing power itself, according to the report, which noted that plans could change. If it decides to sell access to AI models on its own infrastructure, it would be taking a similar approach to Amazon - running the data centers and chips that power the bots and then charging customers fees to access them. Elon Musk's SpaceX - which took over his artificial intelligence firm xAI in February - has adopted a similar approach, striking lucrative rental deals with Anthropic and Google for access to its huge Memphis data center. Anthropic agreed to pay $1.25 billion a month, while Google signed off on a $920 million monthly fee. Meta could alternatively choose to sell access to its computing capacity, similar to CoreWeave's business model. OpenAI kicked off the race to amass large amounts of computing capacity in 2022 with the launch of its ChatGPT bot, as developers recognized that there was a limited amount of power despite skyrocketing demand. In April, shares in Meta slid after the company raised its spending forecast to $145 billion amid mounting fears that AI stocks are overvalued, similar to the "dot-com bubble" of the early 2000s. Meta CEO Mark Zuckerberg has repeatedly insisted that it's crucial for the company to build up as much computing capacity as possible and consider its use later, since supply is limited - but in May, he signaled an openness to selling excess power. "It's definitely on the table," Zuckerberg said at the annual shareholder meeting. "Almost every week there are different companies that come to us from the outside asking us to both stand up an API service or asking if we have compute that they could buy from us at some premium to what we've bought it at." "We haven't done that yet because we think we have a use for the compute," he added. "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." Last summer, Meta paid a whopping $15 billion to hire AI brainiac Alexandr Wang and take a 49% stake in his startup, Scale AI. The company released its first AI model under Wang's lead in April - though the model, called "Muse Spark," did not live up to hopes for a state-of-the-art bot. Wang has defended the model, saying it should serve as an "appetizer" while Meta is "cooking" up the main course.

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

Meta Platforms is reportedly exploring a move into the cloud computing business, aiming to lease out its surplus AI computing power. This strategic shift could lessen Meta's dependence on advertising revenue and position it as a competitor against tech giants like Amazon and Microsoft. 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."

Meta just picked a fight with Amazon's cash cow

Wall Street does not punish companies for spending money. It punishes them for spending money without a story. Give investors a believable path from this year's bills to next year's profits and they will forgive almost any number on the capital expenditure line. Take that story away, and every dollar spent starts to look like a dollar burned. That is the bargain behind Big Tech's artificial intelligence build-out. Microsoft (MSFT), Amazon (AMZN), and Alphabet (GOOGL) plan to spend roughly $570 billion combined on infrastructure this year, and the market has mostly given them a pass, according to CNBC. Each of them owns a business that rents computing power back out to paying customers, turning capex into invoices. One member of the club never got that grace. Its spending guidance kept climbing, its free cash flow kept shrinking, and every earnings call turned into a cross-examination about when all those chips would start paying for themselves. The stock came into July down almost 7% for the year while the S&P 500 gained 9.6%. Now that company wants to change the story. Meta Platforms (META) is building a cloud computing business designed to sell the very thing investors feared it was hoarding, Bloomberg reported July 1. Just_Super / Getty Images Why Meta's AI spending became a problem Meta spent $72.2 billion on capital expenditures in 2025. In January it guided 2026 spending to a range of $115 billion to $135 billion, then raised that range to $125 billion to $145 billion after its first-quarter report. The top of that range works out to roughly $276,000 every minute of the year. The market's verdict was harsh. Meta shares fell more than 10% the day after that report, erasing roughly $175 billion in market value despite 33% revenue growth. More AI stocks: What struck me when I lined up the four hyperscalers' capital budgets was not the size of Meta's number. It was the loneliness of it. Microsoft can point to Azure, Amazon can point to Amazon Web Services (AWS), and Google can point to Google Cloud when investors ask what all that hardware earns. Until this week, Meta could only point to the ad business that already pays for everything else. That is why its spending drew a downgrade from JPMorgan while rivals spending far more escaped one. The pressure showed up everywhere. The company reportedly weighed sweeping layoffs to offset AI costs, as TheStreet reported in March. JPMorgan also projected Meta's free cash flow would turn negative this year. Spending was no longer an investment narrative. It was a solvency question, at least in the market's imagination. Inside Meta's plan to challenge Amazon's cloud empire The project runs under the internal name Meta Compute and is led by infrastructure chief Santosh Janardhan and Daniel Gross of Meta Superintelligence Labs, according to Bloomberg's reporting, which CNBC covered July 1. The plans are early and could still change, and Meta declined to comment. The raw material for the business is already bought and paid for. Model developers have been racing to lock up computing power since OpenAI set off the AI boom in late 2022, and demand still far outpaces supply, according to CNBC. Meta simply acquired more of it than its own products currently need. Two offerings are on the table. One would sell access to AI models, including Meta's own Muse Spark family, hosted on Meta's infrastructure, an approach similar to Amazon's Bedrock service. The other would rent out raw computing capacity, the business model of so-called neoclouds like CoreWeave (CRWV). Investors did not wait for an official announcement. Meta shares jumped more than 10% to around $619 on July 1, according to Investing.com. CoreWeave shares dropped more than 10% on the same report, according to 24/7 Wall St. To understand why the incumbents should care, look at what this business does for Amazon. I ran the numbers on Amazon's first-quarter results, and AWS produced just over 20% of the company's revenue but nearly 60% of its operating income. The unit earned $14.16 billion on $37.6 billion in sales, a 37.7% margin, with revenue growing 28%, its fastest pace in 15 quarters, according to CNBC. Amazon CEO Andy Jassy called that growth "very unusual for a business to grow this fast on a base this large" on the company's April 29 earnings call, according to Digital Commerce 360. The market Meta is walking into looks like this: * Global cloud infrastructure spending hit $128.6 billion in the first quarter of 2026, up 35% from a year earlier, according to Synergy Research Group. * Amazon led with 28% of that market, followed by Microsoft at 21% and Google at 14%, per Synergy Research Group. * Trailing 12-month cloud revenue reached $455 billion industrywide, per Synergy Research Group. * AWS alone is running at a $150 billion annualized revenue rate, according to Digital Commerce 360. The market is still accelerating, too. "The Q1 market is now fifteen times larger than it was a decade ago," Synergy Research Group chief analyst John Dinsdale said in the firm's April 29 report. What Meta's cloud gambit means for investors Let me be honest about the hard part. Amazon has been perfecting enterprise cloud since 2006, Microsoft and Google have decades of corporate relationships, and selling to chief information officers is a completely different muscle than selling ads. Meta will not take meaningful share in a quarter, and maybe not in a couple of years. Corporate buyers will also need convincing that a social media company with a long history of privacy fights can be trusted to run their workloads. But the stock does not need market share to work from here. It needs the capex story to change, and that already happened. A cloud business means "Meta no longer would be a one-trick pony," according to CNBC's Investing Club analysis of the plan. My read is that the number to watch is not cloud revenue, which does not exist yet. It is how Meta frames its capital spending on the second-quarter earnings call in late July. If executives confirm Meta Compute, every future guidance hike stops reading as a cost and starts reading as inventory. There is a second signal worth tracking. CoreWeave's slide on July 1 shows how quickly a well-funded new landlord could reset prices across the compute rental market, and that pressure arrives whether or not Meta ever posts a dollar of cloud revenue. If you own an S&P 500 index fund, you now own both sides of this fight. The four largest capital budgets in corporate America are pointed at the same business, and the price war that could follow would land on cloud customers, AI startups, and Amazon's most profitable division all at once. Meta spent two years buying more computing power than almost anyone on Earth. The company just signaled it intends to start charging rent on it. The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc. This story was originally published July 2, 2026 at 1:07 PM.

Jim Cramer Says Meta Is Entering the 'Most Lucrative Game,' Reiterates AI Cloud Business Is 'Worth $100'

Meta's AI Compute Strategy Sparks Investor Optimism Meta's stock climbed after a report revealed the company is building an internal initiative known as Meta Compute, which would allow it to generate revenue from excess AI computing capacity. The second would involve selling raw computing capacity to businesses, putting Meta in competition with AI-focused cloud providers such as CoreWeave Inc. (NASDAQ:CRWV). The move could help offset the company's massive investments in AI infrastructure as demand for graphics processing units and computing power continues to outpace supply. Jim Cramer Calls Move 'Worth $100' Per Share Reacting to the news, CNBC's Cramer doubled down on his bullish view of Meta. "I reiterate what I have been telling club members. This Meta news is worth $100," he wrote on X. In a separate post, Cramer questioned why the market reaction was not even stronger. "I find it difficult to believe that Meta was up only 49 points when it is getting into the most lucrative game, business-to-business at 18x eps????" Meta shares closed Wednesday at $612.91, up $49.62, or 8.81% and declined 0.13% to $612.10 in after-hours trading, according to Benzinga Pro. Analysts See AI Compute Monetization As Strategic Move "$META setting itself up to offer compute services is not an indicator of abundance. It's a smart business move that allows it to invest ferociously while mitigating risk and offsetting expense as it increases consumption and monetization," Newman wrote. Nebius shares closed Wednesday at $229.18, down 17.01%, while Cipher closed at $22.84, down 6.78%. Meta told investors in April that it expects to spend as much as $145 billion on capital expenditures this year as it continues expanding data centers and acquiring AI chips to support its growing artificial intelligence ambitions. According to Benzinga Edge Rankings, Meta scores in the 88th percentile for growth, although the stock has delivered negative returns across the short, medium and long term. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: katz / Shutterstock.com Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

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 reportedly readies Meta Compute: a cloud rival to AWS and Azure

Customers could rent spare GPUs for AI training and inference Meta Platforms appears to be lining up a cloud service called Meta Compute, built on the same infrastructure it's been scaling at speed for advanced model development. According to reports, the service could let customers rent Meta's spare capacity, including high-end GPUs for training and inference. It may also give companies access to Meta-hosted models, or let them run their own models on Meta hardware. If that happens, Meta won't just be building for itself. It'll be going head-to-head with Amazon Web Services, Microsoft Azure, and Google Cloud. The timing makes sense given how aggressively Meta is building. After roughly $72 billion in 2025 capex, the company said it expects to spend about $125 billion to $145 billion in 2026. It already runs around 30 data centers and is aiming for tens of gigawatts of compute. Renting out idle systems would help soften some of that cost while demand is still tight. Analysts pointed to a recent example: GitHub reportedly turned to Amazon Web Services when Microsoft Azure couldn't meet short-term needs. If you watch Meta Platforms for more than the advertising business, this one deserves attention. CEO Mark Zuckerberg has said the idea is "definitely on the table," and other companies have reportedly asked to buy spare capacity. Meta shares rose about 9% to 10%, while CoreWeave and Nebius reportedly dropped. Morgan Stanley also said leasing 250 megawatts could add roughly $2.97 to 2028 EPS, though cloud is a harder business than ads in a few very specific ways. Margins are different, support is heavier, reliability matters more, and customers usually want long contracts. For now, though, there's nothing to download. Meta Platforms hasn't announced a product, pricing, SLAs, or a launch date.

Meta knocks neo-clouds out of the sky

Until now, the dominant narrative was based on the idea that compute capacity is scarce, GPUs are in short supply, and any company that is capable of locking down megawatts, chips and data centers can monetize them at high prices, to the delight of semiconductor companies and "neo-clouds" such as CoreWave and Nebius. However, Meta's project suggests that part of this shortage may not reflect only explosive end demand, but also a hoarding phase typical of gold rushes. Fearing they will run out of compute, the big tech groups have secured massive capacity beyond their needs. When capital spending becomes too heavy for balance sheets, those capacities ultimately have to be used, rented out, or monetized. The project reported by Bloomberg would involve marketing part of Meta's surplus capacity via a cloud business dedicated to artificial intelligence. The initiative would not necessarily be limited to simply renting raw power, but could also include access to its AI models via its infrastructure, operating in a way similar to Bedrock at AWS. Even if Meta obviously will not turn all of its infrastructure into an external cloud, because the group needs a considerable share of its compute for its own operations, the order of magnitude remains impressive. Based on its guidance, Meta would have about 5.5 GW of planned or reserved capacity by mid-2026, versus 1.5 GW for Oracle Cloud, 1.2 GW for CoreWeave, 0.5 GW for SpaceX/Starcloud and 0.4 GW for Nebius. As a result, even 10% of Meta's capacity made available to the market would already represent a compute volume comparable to that of some specialized players. The shortage may mostly be masking a hoarding phase Meta's decision matters because if groups this large have accumulated capacity beyond their immediate needs, the apparent shortage could in fact reflect a phase of defensive stockpiling rather than a truly durable supply deficit. The market read this buildout as proof of structurally insatiable demand, when it could instead be the result of classic "gold rush" cycle behavior. In that scenario, everyone buys shovels, land, and concessions ahead of others, prices rise, capacity is reserved far in advance, then financial pressure gradually forces some players to put part of those assets back on the market. The Meta news is significant because it shows that the compute amassed during the euphoric phase now has to generate a visible return, putting ROI back at center stage. Meta's decision also echoes SpaceX's, whose move into the neo-cloud space is not only an opportunistic strategic choice, but also an effort to monetize surplus compute capacity, notably tied to the xAI ecosystem. Meta is simply taking that logic to a different scale. Capital discipline catches up with the AI rush For Meta, the market may see it as a welcome monetization option. The group remains heavily dependent on advertising, and its massive AI investments now need to result in more visible revenue. The stakes are even higher because Llama, despite its adoption in the open-source ecosystem, remains less directly monetized than the AI offerings integrated into the clouds of Alphabet, Microsoft, or Amazon, while newer closed models still have to prove themselves. By providing access to its models and infrastructure, Meta would therefore be looking to turn a strategic cost center into a real revenue line. For pure-play compute companies, the signal is far more worrying. The arrival of a player with that kind of capacity could weigh on rents, margins, and valuation multiples, especially if it encourages other hyperscalers to monetize their own excess capacity in turn. In that scenario, neo-clouds would no longer be facing competition only from other compute specialists, but from the very largest hyperscalers. Overall, the announcement therefore looks more negative for markets, because Meta's entry into the compute market points to excess capacity at some major players and balance-sheet pressure too large to ignore, raising the odds of a pullback in AI investment, and therefore in the revenues of upstream companies such as semiconductors.

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.

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)