- Meta shares jumped 9.3% to $615.55 in New York on Wednesday, marking the biggest intraday gain since April, while CoreWeave fell as much as 14% and Nebius Group NV dropped as much as 17%.
- CoreWeave stock sank on Wednesday, wiping out more than $7 billion in market value but Rosenblatt Securities sees a buying opportunity.
- CoreWeave stock dropped 5.6% to $80.86 on Thursday after sinking 14% on Wednesday.
- The strategy of squeezing extra dollars from consumers was insufficient, prompting Meta to explore new revenue lines tied to AI spending.
- Meta is selling excess compute capacity to outside customers, which is confusing given the previous narrative of a compute shortage.
- If Meta has hoarded so much compute that it can sell leftovers, it suggests a struggle with its AI efforts.
- Zuckerberg previously stated that Meta would use extra compute to accelerate its core business, indicating a shift in strategy.
- Meta’s stock dropped 14% this year as shareholders questioned the value of the projected $135 billion in capex.
- Thill sees META capturing share of a $2 trillion AI compute backlog where capacity is sold out and prices are rising across all three incumbents.
- Google, Amazon, and Microsoft collectively carry a $2 trillion backlog of compute demand, indicating that any credible fourth entrant with capital can capture a profitable slice.
- Thill argues that everyone is ’sold out for six months,’ that you cannot get enough compute, and that prices have actually risen across the three incumbents.
Meta Platforms is launching a cloud infrastructure business to sell excess AI computing capacity, a move that has sent its stock soaring by 9.3%. This initiative aims to tap into a $2 trillion AI compute backlog, as demand for AI resources continues to outstrip supply.1456710
The new venture could include access to Meta's AI models, similar to Amazon's Bedrock service, and is seen as a potential revenue stream amid rising investor concerns over the company's $135 billion capital expenditures.
CoreWeave, a competitor in the AI cloud space, faced significant market pressure, with its stock dropping 14% and losing over $7 billion in market value. Analysts suggest that Meta's entry into the market could disrupt CoreWeave's business model, which relies on selling AI computing power.2
Despite the challenges, CoreWeave's analysts view the selloff as an overreaction, maintaining a $250 price target, indicating a potential 209% upside.
As Meta prepares to enter this competitive landscape, it faces the challenge of catching up to established players like Amazon, which controls nearly 50% of the cloud market.
The implications of Meta's move could reshape the AI infrastructure market, as it leverages its substantial resources to potentially undercut competitors and capture a share of the growing demand for AI services.
“Meta's stock surged 9.3% following its announcement to develop an AI cloud infrastructure business. In contrast, CoreWeave's stock has faced significant declines, raising concerns about its market position.”
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