Meta shares jump 15% on plan to rent out AI infrastructure
Meta's shares posted their best week since early 2024 after outlining a plan to monetise its AI infrastructure, a shift that matters because it attempts to convert a massive cost centre into a revenue line against entrenched cloud competitors.
Meta’s stock rose roughly 15 percent this week, its strongest weekly gain since early 2024, after the company announced plans to sell AI computing capacity and models to external customers through a new initiative called Meta Compute.
The rally reversed a miserable year for the stock, which had remained flat while the Nasdaq-100 climbed 18 percent. Investors had grown anxious over the scale of Meta’s AI capital expenditure without a clear path to returns.
Renting out spare compute capacity offered a straightforward answer. Mark Zuckerberg had already signalled the direction, noting that an AI cloud business "makes sense". The pitch aims to turn a colossal cost centre into a distinct revenue line.
Wall Street responded aggressively to the narrative. Wolfe Research estimates that for every gigawatt of compute Meta monetises at roughly a $25bn annual rate, earnings per share could rise by about 20 percent. Options traders mirrored this optimism, pushing volume to more than three times the 30-day average, with 78 percent of the $1.8bn in premiums tied to call options.
Analyst targets for the next twelve months have clustered in the low-to-mid $800s, ranging from a bearish $720 to a bullish $869. The compute story was further bolstered by the release of Meta’s new Muse Image model and the decision to push its own MTIA chip into production to cut its dependence on Nvidia.
Beneath the market optimism lies a structural challenge. Meta Compute has not secured a single customer, and the company has no experience running a cloud service for external clients. AWS, Azure, and Google Cloud hold a decade-long head start in operations, sales, and enterprise trust.
There is also an uncomfortable alternative reading of the news. Renting out excess capacity might simply indicate that Meta bought more computing power than it can actually use. This pivot comes alongside a stark human cost, as the company cut 8,000 jobs while posting record revenue and funnelling cash into the very infrastructure this rally is celebrating.
For now, investors have bought a plausible story. Whether Meta can actually sell compute against three entrenched hyperscalers is a question the current share price cannot answer.
