Meta Platforms (META) shares surged 10.6% in trading on Wednesday after a Bloomberg report revealed the company is developing a cloud infrastructure business to sell artificial intelligence computing power and hosted AI models to external customers. The move would allow Meta to monetize its massive AI infrastructure investments beyond its core advertising business.
Meta's AI Cloud Plans
According to the report, Meta is exploring several options for its new cloud initiative, which falls under Meta Compute, the company's internal effort to build and manage AI infrastructure. One option would let customers access AI models hosted on Meta's infrastructure, similar to Amazon Web Services' Bedrock platform. Another would involve selling raw computing capacity, putting Meta in direct competition with AI-focused cloud providers such as CoreWeave and Nebius.
The news weighed on those competitors: CoreWeave fell about 14%, and Nebius dropped 15% in trading. The move would also intensify competition for major cloud providers, including Amazon Web Services, Microsoft Azure, and Google Cloud.
Monetizing AI Investments
Meta has significantly ramped up spending on artificial intelligence infrastructure as it pursues its goal of developing AI "superintelligence." In April, the company raised its projected capital expenditure for the year by $10 billion to a range of $125 billion to $145 billion, citing higher component pricing and additional data center costs. Meta has also committed billions to data centers and AI chips while entering computing agreements with companies including CoreWeave, Google, and Oracle.
A cloud infrastructure business could provide Meta with a way to generate revenue from excess AI computing capacity, creating a new income stream. Unlike its cloud rivals, Meta has historically justified its AI spending primarily through improvements to its own products, while Amazon, Microsoft, and Google have long generated revenue by renting computing infrastructure to external customers. This shift could help Meta better capitalize on its growing AI investments, similar to how Cerebras surged 11% on its $5.5B European AI data center expansion.
Zuckerberg's Openness to the Idea
Meta Chief Executive Officer Mark Zuckerberg has previously signaled openness to selling excess computing capacity. "It's definitely on the table," Zuckerberg said during a shareholder call in May. "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."
Zuckerberg noted that Meta hasn't done so yet because it believes it has a use for the compute, but added, "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." He has repeatedly argued that computing capacity remains one of the biggest constraints in the AI industry, supporting Meta's strategy of aggressively expanding its AI infrastructure while determining additional commercial uses for that capacity over time.
Broader Implications for AI Infrastructure
The report comes as investors continue to monitor Meta's efforts to commercialize artificial intelligence through products such as its Meta AI chatbot. The company's AI chip production plans have also boosted semiconductor equipment demand, as seen in Applied Materials surging 7% on Meta's AI chip plans. Additionally, Meta's stock gains on AI chip production plans and the Muse Spark 1.1 launch have kept investor interest high.
Meta's potential entry into the cloud market could reshape the competitive landscape, especially as other firms like MARA Stock surged 35% YTD after a $600M Texas land grab for AI data center expansion. The move underscores the growing demand for AI computing power and the race among tech giants to capture that market.
This article is for informational purposes only and does not constitute financial advice.
