Meta stock surged more than 9% on July 1 after the company announced plans to build a cloud business that would sell excess AI computing power to outside customers, easing investor concerns about whether its massive infrastructure spending will generate returns.
The announcement came as Bloomberg reported that Meta Platforms is developing a cloud infrastructure business to compete with Amazon Web Services, Microsoft Azure, and Google Cloud. The move gives Meta a potential new revenue stream from its enormous AI investments.
Meta has faced mounting questions about its aggressive capex spending. The company raised its 2026 capital expenditure guidance to between $125 billion and $145 billion in April, nearly double its 2024 spending of $37.2 billion. Investors worried the company was pouring money into infrastructure with no clear path to monetize it beyond its existing advertising business on Facebook and Instagram.
“Until today, our feeling was, what the heck is Meta doing?” Jim Cramer said on CNBC on Wednesday, referring to the spending. “Now they’re going to use that compute power to offer a profitable enterprise to their customers.” Cramer noted that cloud computing has proven to be an immensely profitable business for other companies.
Meta shares closed Wednesday at $617, among the biggest gainers in the S&P 500. The stock had entered the day down almost 7% for the year, trailing both the S&P 500 and the tech-heavy Nasdaq Composite, according to CNBC. Meta CEO Mark Zuckerberg said in late May that launching a cloud computing business was “definitely on the table,” but the Bloomberg report Wednesday marked the first public confirmation of the company’s plans.
The cloud business could take two forms, according to analysts interviewed by CNBC. One approach would resemble AWS Bedrock, allowing developers to access AI models hosted on Meta’s infrastructure. The other would involve selling raw computing capacity similar to neocloud providers like CoreWeave or SpaceX, which struck a deal with Google last month to provide $920 million a month in computing power.
Tech analyst Ben Bajarin said the timeline for Meta’s cloud offering depends on how ambitious its plans are. If the company rents out excess AI infrastructure, the offering could arrive quicker because customers would supply their own software. Building a full-fledged cloud platform like AWS or Google Cloud would take much longer, requiring software that allows customers to deploy workloads on Meta’s infrastructure.
Meta’s investment-grade balance sheet gives it a major edge over newer AI infrastructure providers that have relied heavily on debt, according to Paul Meeks, head of technology research at Freedom Capital Markets. However, Meeks questioned whether AI companies would want to host sensitive workloads on infrastructure owned by a competitor that’s also building its own AI models and applications.
Sources
- Bloomberg — Meta’s plans to develop a cloud infrastructure business to sell AI computing power and models
- CNBC — Meta stock surge and analysis of the cloud business announcement as easing investor concerns about AI spending
- Seeking Alpha — Meta shares jumped more than 10% in early trading on the Bloomberg report
- Yahoo Finance — Meta stock performance and historical capex figures
