Meta is building a cloud business that sells excess artificial intelligence computing power.
The decision comes as tech giants seek returns from expensive AI investments amid concerns about overspending.
As Bloomberg News reported on Wednesday, the plan is still in development and the strategy is subject to change.
Meta shares rose more than 10% and were down nearly 15% as of Tuesday, easing pressure on the stock, which has underperformed the S&P 500 since the beginning of the year.
Neocloud companies Coreweave and Nevius fell 10.8% and 12.4%, respectively, on concerns that the move would reduce spending on services by major customer Meta and increase competition.
By competing directly with major cloud providers Amazon, Microsoft, and Alphabet, Meta could tap into the surging demand for AI services from enterprises while reducing its dependence on the advertising market.
But analysts said it also deepened doubts about the social media giant’s efforts to catch up with big AI labs such as Anthropic, which CEO Mark Zuckerberg has backed with billions of dollars in investments, sparking a talent war last year.
Since OpenAI launched the AI boom in 2022 with the launch of its ChatGPT chatbot, model developers including Meta have been racing to secure computing power, with demand far outstripping supply.
Meta told investors in April that it plans to spend up to $145 billion in capital expenditures this year to continue developing its data centers and securing the graphics processing units needed to train AI models and run large-scale workloads.
By launching a cloud business, Meta could generate revenue from unused capacity, a welcome signal for some investors worried about the company’s spending plans.
Analysts also suggest that the new business could put Meta into a new, fiercely competitive market dominated by companies like Amazon, Microsoft, Google and Coreweave.
