Meta shares surge on report of new AI cloud business
The move aims to ease investor concerns over Meta's heavy AI spending.
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SAN FRANCISCO: Shares of Meta Platforms jumped more than 6 per cent on Wall Street on Wednesday (Jul 1) after a report said the social media giant is preparing to launch a cloud computing business that would sell AI computing power to outside customers.
The report, published by Bloomberg, said Meta is developing plans to compete directly with Amazon Web Services, Microsoft Azure and Google Cloud by monetising the excess computing capacity it has built up while racing to develop artificial intelligence.
The company would also sell its own internally designed AI models to business customers for their own uses - a major emerging market for the cloud computing giants.
Meta has poured hundreds of billions of dollars into data centres and AI chips as it pursues what CEO Mark Zuckerberg has called "superintelligence", spending that has fuelled investor concerns about how the company will generate returns.
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The company, which has struck major computing deals with CoreWeave, Google and Oracle, had seen its share price lose ground in recent months due to the AI overspending concerns.
Zuckerberg has previously signalled openness to selling excess computing capacity or launching a service that would charge business customers for AI usage measured in tokens.
"It's definitely on the table," Zuckerberg told shareholders on an earnings call in May.
Rival Elon Musk's SpaceX - which includes his AI startup xAI - ahead of an IPO last month began renting capacity from its Memphis data centre to Anthropic and struck a deal with Google.
The moves could bring in tens of billions of dollars in revenue and help reassure investors as spending on AI infrastructure becomes an increasing source of worry, with returns on investment not near the levels needed to break even.
In the race to lead on AI, Meta has lagged behind Google, OpenAI and Anthropic, with the company's own models, often delayed, proving disappointing.
Zuckerberg invested over US$14 billion last year into Scale AI, a San Francisco-based startup, and poached its CEO Alexandr Wang - who was 28 years old at the time - to run the AI lab inside Meta.
He has also poached top talent from his competitors.
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