Metaplatform (Meta) Much of the artificial intelligence boom has been spent asking investors to put their faith in the bill.
But now Wall Street may finally have a clearer answer about how Mark Zuckerberg plans to turn that spending into revenue.
Meta is setting up a cloud business to sell spare AI computing power, Reuters reported. The business could bring Meta closer to the AI infrastructure market, currently dominated by cloud giants and emerging computing providers, by giving developers access to Meta’s AI models and letting clients buy raw computing power.
This is a big change for companies that still derive the majority of their profits from digital advertising.
Meta reported first-quarter revenue of $56.31 billion, of which $55.02 billion came from advertising. Operating margins are 41%, which few large technology companies can match.
So while investors like the idea of cloud, they may not be able to ignore the costs.
A cloud business could help Meta monetize its massive AI and data center buildout. But it also risks drawing businesses into low-margin infrastructure markets, where the economics are fundamentally different than Facebook or Instagram marketing.
Meta stock recently traded at $582.90, giving the Facebook and Instagram parent company a market cap of about $1.49 trillion.
A new AI profit story emerges for Meta stocks
Timing is critical.
Meta is investing heavily in AI infrastructure, processors, and data centers, but investors want to know when it will turn a profit.
The company announced that capital expenditures, including principal payments on finance leases, were $19.84 billion in the first quarter. Meta also revised its 2026 capital spending outlook to between $125 billion and $145 billion, noting higher component prices and increased data center spending related to future capacity.
Investors feel more comfortable making this type of spending when there is a clear revenue stream tied to it.
A cloud business may be able to provide that.
If Meta has more AI computing power than it needs for its own models, advertising tools, and consumer apps, selling that power to outside developers could make the build-out look more like a platform business than an open-ended cost.
This idea also answers broader strategic questions for Meta.
Related: Meta just picked a fight with Amazon’s cash cow
So far, most of the AI rewards for the meta have been in the advertising machine. AI can help power targeting, ad creation, and engagement across Facebook, Instagram, and WhatsApp.
While that’s helpful, it doesn’t fully address investors’ concerns that Meta is spending tens of billions of dollars on infrastructure without building a new, separate business.
Cloud computing has the potential to change this narrative.
Meta’s cloud push could squeeze margins
The problem is that cloud revenue is not advertising revenue.
Further meta:
Meta’s advertising business has been unusually successful because the company already owns the platform, audience, and auction system to sell advertising space.
Cloud computing is a different story because it requires large infrastructure investments, enterprise customers, sales teams, service contracts, technical support, and ongoing investments in chips and data centers.
alphabet (google) It shows the contrast.
Google Services had first quarter revenue of $89.64 billion and operating profit of $40.59 billion. Google Cloud had revenue of $20.03 billion and operating profit of $6.6 billion.
Key takeaways from Meta’s cloud push
Meta is reportedly building a cloud business to sell excess AI computing power.
The move could help Meta monetize its heavy spending on AI and data centers.
Meta raised its 2026 capital spending forecast to $125 billion to $145 billion.
Advertising still accounted for nearly all of Meta’s first-quarter revenue.
Cloud computing can potentially diversify revenue, but profit margins may be lower.
Alphabet’s results show the cloud can be profitable, but the economics are different than advertising.
The question for investors is whether Meta is selling excess capacity or entering the low-margin infrastructure battle.
Google Cloud is a great business. It is a rapidly growing and currently profitable business.
But the company’s revenue profile remains different from the advertising-heavy Google services company. If cloud becomes a big part of the company’s future, that’s an issue meta investors may have to take into consideration.
Mehta isn’t concerned with whether cloud computing is profitable.
The worry is that those gains will erode the profit margins that have made Meta one of the tech industry’s most lucrative companies.
Meta could weigh on AI cloud stocks
Meta won’t become the next Amazon Web Services overnight.
The more likely short-term courses are more limited and sell AI-specific processing power to developers and companies that need access to expensive infrastructure.
This brings the company even closer to the world of AI-centric cloud vendors, including: Coreweave (CRWV) and Nevius Group (NBIS) It’s not a full-service cloud giant.
Rumored meta plans could put the company in competition with CoreWeave and Nebius, Reuters said.
That’s why this report is important beyond the meta.
CoreWeave’s stock price was most recently valued at $81.75, giving the company a market capitalization of approximately $43.1 billion. Nevius was currently trading at $215.62.
Meta has one advantage that those companies don’t have.
The cloud doesn’t have to be the whole story.
The same infrastructure could be leveraged by companies for Meta AI, Instagram, Facebook, and WhatsApp, as well as their own AI models, advertising products, and recommendation systems. Meta can offload free space. And if internal demand increases, Meta can consume more of it.
What makes this strategy particularly attractive is its flexibility.
It also makes margin issues more difficult.
We may finally have a bottom-line answer to Zuckerberg’s AI spending. COM&O/Getty Images
Meta’s cloud push gives it what Wall Street wanted: a potential revenue stream tied directly to the company’s AI spending.
But that also means investors have new things to worry about.
Meta’s core advertising business is asset-light compared to its cloud infrastructure. Selling processing power will help justify AI ramp-up, but it could also make the meta look like a capital-intensive, end-of-the-line infrastructure business.
This is the real trade-off.
If Meta can sell its idle AI capabilities without developing a large-scale cloud operation, it could be a smart approach to get more bang for the buck it was already trying to make.
If the company moves deeper into enterprise cloud, investors may have to accept a business with more diversified revenue but lower margins.
So far, Wall Street is a fan.
The next test will be whether Meta can demonstrate that cloud computing is not just a smart answer to AI spending concerns, but a business that can grow revenue without hurting the profit profile that made the stock so attractive in the first place.
RELATED: Meta says he can read your thoughts without surgery
This story was first published The Street First appeared on July 4, 2026. invest section. TheStreet Click here to select your preferred source.
