Meta eyes cloud business to sell excess AI computing power

Meta is exploring a new business venture: a cloud service that would allow external developers to access and utilize its substantial artificial intelligence (AI) computing power. This potential move comes as the tech giant faces increasing investor scrutiny over the profitability and timeline of its massive AI infrastructure investments.

The company is reportedly considering two main approaches. One involves offering access to Meta's AI models, such as 'Emu Spark,' on its existing infrastructure, charging developers for the computing power they consume. This model mirrors services offered by Amazon Web Services (AWS) and Google Cloud. The second option is to lease raw computing capacity, including graphics processing units (GPUs) and servers, directly to clients.

Meta has poured billions into data centers, servers, and AI chips, aiming for 'superintelligence.' The company's projected capital expenditure for this year alone is between $125 billion and $145 billion. However, with advertising remaining its primary revenue source, questions linger about when these AI investments will yield substantial returns. Despite launching its new AI model 'Emu Spark' in April, Meta still trails behind key competitors in the AI race.

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definitely something we're looking at

This potential cloud business is seen as a crucial avenue for Meta to recoup its AI spending. CEO Mark Zuckerberg previously acknowledged the possibility, stating in May that cloud computing was "definitely something we're looking at." He noted that external companies had inquired about purchasing Meta's computing assets, adding that if Meta felt it had overbuilt capacity, offering cloud services would be a viable option. Elon Musk's xAI has already leased data center access to Google and Anthropic to help recoup costs.

The market reacted diversely to the news. Meta's stock surged by 8.8% on the prospect of recouping investment costs. Conversely, shares of semiconductor companies and related AI infrastructure providers fell. Micron Technology dropped 10.57%, SanDisk 10.62%, and Intel 9.03%, as the announcement fueled concerns about an oversupply in the AI infrastructure market among major tech firms.

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if we feel like we have overbuilt, that is an option that we have