Meta is entering the AI cloud market

Meta stock surged nearly 9% on Wednesday after reports revealed the company is preparing to enter the cloud computing market by renting out its excess AI computing capacity.

The move could help the tech giant generate new revenue and offset its massive investments in artificial intelligence infrastructure.

Meta has aggressively expanded its AI capabilities since the launch of ChatGPT in 2022 fueled industry-wide demand for computing power. 

The tech giant had committed $182.9 billion to AI infrastructure as of the end of Q1, with major projects underway in Louisiana and Ohio.

It is reportedly weighing two options: offering customers access to AI models hosted on its infrastructure or selling raw computing power. Either approach would place Meta in direct competition with major cloud providers such as Amazon, Microsoft, Google, and CoreWeave.

The strategy follows a similar approach to SpaceX’s, which has already secured multi-billion-dollar computing contracts with AI companies.

Investors welcomed the plan because it could turn unused AI capacity into a profitable business. However, the news sent shares of AI cloud providers CoreWeave and Nebius Group down about 12%, reflecting concerns over increased competition.

CEO Mark Zuckerberg had previously indicated that monetizing excess AI infrastructure was part of Meta’s long-term strategy if the company built more computing capacity than it needed.

The expansion marks another major step in the company’s push to strengthen its position in the fast-growing AI industry.