- Meta Platforms has announced plans to potentially launch a cloud business by selling excess computing power or hosting large language models (LLMs).
- According to *Bloomberg*, Meta is still deciding whether to sell access to its computing infrastructure or host LLMs in its data centers.
- The move into cloud computing demonstrates that there is currently so much demand for these services that it is difficult to overbuild your own AI infrastructure, since you can just rent it out to someone else.
- This strategic shift could help ease concerns about overspending and bolster Meta's strong core business.
- Last quarter, Meta saw its revenue growth accelerate, climbing 33% to $56.3 billion, driven by increased ad impressions and higher ad prices.
- Despite its strong and accelerating revenue growth, Meta trades at a forward price-to-earnings ratio (P/E) of only 18 times this year's analyst estimates.
- Meta is using AI to improve its recommendation algorithm, which keeps users on its apps longer and allows it to serve more ads to them.
Meta Platforms' foray into cloud computing could reshape its financial landscape as it plans to sell excess computing power, potentially positioning itself alongside giants like Amazon and Microsoft.
The company is currently evaluating whether to offer access to its computing infrastructure or host large language models (LLMs) in its data centers.1
This strategic move comes amid a surge in demand for cloud services, making it challenging to overbuild AI infrastructure, as companies can simply rent it out.3
Last quarter, Meta's revenue growth accelerated by 33%, reaching $56.3 billion, fueled by a 19% increase in ad impressions and a 12% rise in ad prices.5
The integration of AI into its recommendation algorithms has not only enhanced user engagement but also allowed for more targeted advertising, driving up ad prices.
Despite this robust growth, Meta's stock trades at a forward price-to-earnings ratio (P/E) of just 18 times this year's analyst estimates, indicating potential undervaluation.6
As the company navigates its cloud ambitions, it aims to alleviate investor concerns about overspending while reinforcing its core business, which is performing exceptionally well.4
With these developments, analysts view Meta as a strong long-term investment opportunity.
“Meta is deciding whether to sell access to its computing infrastructure or host LLMs in its data centers, according to Bloomberg. The move comes as Meta's core ad business accelerates, with revenue climbing 33% to $56.3 billion last quarter.”
The Globe and Mail
