Meta (META) Stock Soars 9% on AI Cloud Strategy — But SoftBank’s Entry Changes Everything

Key Takeaways

• Meta Platforms stock climbed 8.8% Wednesday following reports of plans to commercialize excess AI computing infrastructure
• Thursday premarket trading saw Meta stock surrender gains amid doubts about available computing capacity
• SoftBank revealed its entry into the neocloud sector with new subsidiary SB Neo
• SB Neo targets 10 gigawatts of data center infrastructure by approximately 2030
• Existing neocloud providers CoreWeave and Nebius plunged 13.9% and 17% on concerns about Meta competition

Meta Platforms (META) stock rocketed 8.8% higher Wednesday following a Bloomberg report suggesting the social media giant is preparing to monetize surplus AI computing resources through a cloud service offering. However, by Thursday’s premarket session, shares had retreated and were trading approximately flat.

Meta Platforms, Inc., META

Meta has not officially confirmed the reported plans. Nevertheless, market participants responded enthusiastically to the prospect of the company generating additional revenue from its substantial AI infrastructure investments.

The complication? Meta may lack significant excess capacity available for commercialization currently.

Richard Windsor, an independent analyst at Radio Free Mobile, noted that Meta “doesn’t currently have any spare capacity to sell and has been unable to purchase the capacity from Google that it needed.” According to Windsor, Meta would effectively need to halt superintelligence development efforts and suspend certain AI-powered features across its applications to create sellable capacity.

Meta has allocated up to $145 billion for capital expenditures this year. Skeptics are already challenging whether layering a cloud business atop this investment makes economic sense.

“Building data centers is operationally very difficult and hugely capital-intensive,” explained Paul Meeks, head of technology research at Freedom Capital Markets. “As a Meta shareholder, I’d rather see them continue with open models and monetize AI through products and services with much higher margins.”

SoftBank Enters the Arena

Merely one day following the Meta disclosure, SoftBank validated its direct entry into the neocloud sector. The conglomerate unveiled SB Neo Inc., a joint venture designed to lease AI processors and cloud computing infrastructure to major US enterprises, including hyperscale operators.

SB Neo maintains 51% ownership by SoftBank Corp., the telecommunications division, with the remaining 49% held by parent SoftBank Group. The operation is scheduled to officially commence operations this month.

Junichi Miyakawa, CEO of SoftBank Corp., characterized it as “a second founding” for the organization, stating the venture possesses potential to deliver profits “on a different order of magnitude.” Market analysts indicate the neocloud operation could triple or quadruple SoftBank Corp.’s yearly operating income to between ¥3 trillion and ¥4 trillion ($18.5–$25 billion).

SB Neo intends to expand capacity systematically, targeting 10 gigawatts by 2030. Among planned initiatives is a $500 billion data center facility in Ohio, potentially ranking among the world’s largest. SoftBank claims a competitive advantage in power procurement, primarily through gas-fired generation facilities.

OpenAI, in which SoftBank Group has pledged approximately $65 billion in total commitments, may become an initial SB Neo client.

Impact on CoreWeave and Nebius

The revelations severely impacted existing neocloud operators. CoreWeave (CRWV) declined 13.9% while Nebius (NBIS) tumbled 17% Thursday. Both organizations currently provide AI computing services to Meta, confronting the possibility of their largest client transforming into a direct rival.

The neocloud landscape is rapidly becoming saturated. AWS, Microsoft Azure, and Google Cloud already provide AI computing access. Meta, SoftBank, CoreWeave, and Nebius now all compete for identical enterprise client segments.

SoftBank’s SB Neo anticipates commencing service delivery in the United States during the upcoming fiscal year.

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