Meta Shares Surge on Report of AI Computing Power Sales

Meta shares experienced a nearly 10% increase on Wednesday following reports that the company is planning to sell its excess artificial intelligence computing power. This move could help Meta recoup billions of dollars invested in its AI infrastructure.

The Menlo Park, California-based company is said to be developing a new cloud business to offer access to its AI models and computing resources, according to Bloomberg. This development comes as Meta has been aggressively securing data centers and advanced chips to build substantial AI capabilities, aiming for what CEO Mark Zuckerberg has termed “superintelligence."

Investors have expressed concerns about Meta's ability to generate returns on its significant investments in AI. The company has reportedly spent hundreds of billions of dollars on computing power.

Meta has not commented on the report. If the new cloud business is established, it would enable Meta to monetize any underutilized capacity and directly compete with major cloud service providers such as Amazon, Microsoft, Google, CoreWeave, and SpaceX.

According to the report, Meta is considering two primary structures for this cloud business: selling access to its proprietary AI models or offering raw computing power. These plans remain subject to change.

If Meta opts to sell access to its AI models hosted on its own infrastructure, its strategy would resemble that of Amazon, which manages data centers and chips and charges clients for access to power AI applications.

Other companies are already generating substantial revenue through similar models. Elon Musk's SpaceX, for example, has reportedly entered into significant rental agreements with Anthropic and Google for access to its data center capacity, with monthly fees reportedly reaching $1.25 billion for Anthropic and $920 million for Google.

Alternatively, Meta could adopt a business model similar to CoreWeave, which focuses on selling raw computing capacity.

The race to acquire significant computing power was intensified in 2022 following the launch of OpenAI's ChatGPT. Developers quickly recognized a limited supply of computing power to meet rapidly increasing demand.

In April, Meta's stock experienced a decline after the company revised its spending forecast upward to $145 billion. This increase was attributed to growing concerns that AI stocks might be overvalued, drawing parallels to the dot-com bubble of the early 2000s.

Zuckerberg has consistently emphasized the importance of building extensive computing capacity, suggesting that utilization would be addressed later due to limited supply. However, in May, he indicated a potential willingness to sell excess power.

"It’s definitely on the table," Zuckerberg stated at the company's annual shareholder meeting. He noted that external companies frequently approach Meta requesting API services or seeking to purchase compute capacity at a premium.

"We haven’t done that yet because we think we have a use for the compute," Zuckerberg added. "But 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."

Last summer, Meta acquired a 49% stake in AI startup Scale AI and hired its founder, Alexandr Wang, for a reported $15 billion. In April, Meta released its first AI model under Wang's leadership, named "Muse Spark." While the model did not immediately meet expectations for a state-of-the-art bot, Wang described it as an "appetizer" for future developments.