Meta selling AI computing power: surrender or breakthrough? Wall Street is divided.

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Meta's plan to sell idle computing power has sparked sharply different interpretations on Wall Street. Is this a pragmatic concession after the company's ambitious AI dreams encountered setbacks, or a strategic breakthrough turning massive infrastructure investment into a new profit source?

According to reports, Meta is planning to sell its idle computing resources. Upon the news, Meta's share price soared 9% in a single day on Wednesday, posting its best single-day performance in over a year and providing a long-awaited boost for this year’s beleaguered stock. The company declined to comment on the reports.

This move is highly significant for investors. Meta's free cash flow in the second quarter of this year is expected to record a negative value exceeding $1 billion. According to FactSet data, this indicator is projected to further deteriorate sharply in the coming years. If selling computing power externally materializes, it could directly improve the company’s cash flow situation and provide some rebate to support its hefty annual capital expenditure of up to $145 billion.

Pessimists: Internal AI Product Growth Below Expectations

D.A. Davidson analyst Gil Luria takes a cautious view. He believes that Meta's shift to selling computing power signals the company is "giving up on cutting-edge AI." Since the establishment of Meta Superintelligence Labs last year, the company has launched new models like Muse Spark, but still trails behind Anthropic and OpenAI in terms of model competitiveness.

Baird analyst Colin Sebastian also gave a warning. He pointed out that Zuckerberg had previously hinted that the company would only consider selling computing power if it had "overbuilt" its AI infrastructure. Therefore, if Meta really launches a cloud service platform, it may mean that the scaling up of its internal AI products has not met the expected pace. However, Sebastian also acknowledged that, against the backdrop of Meta’s continuously increasing investment in AI, building a cloud platform is in itself a "rational" choice—after all, unlike peers such as Amazon and Alphabet, Meta historically has not sold computing resources to third parties, which has limited its profitability and economies of scale.

Jackson Square Capital founder Andrew Graham shares a similar view. In an interview with MarketWatch, he stated that Meta's decision to sell idle computing power "will help monetize its massive AI infrastructure investments and improve free cash flow expectations—which were originally projected to become significantly negative in coming years."

Optimists: Monetizing Idle Capacity, Enabling Further Investment

Jefferies analyst Brent Thill, however, offers a completely different assessment. In a Wednesday research note, he stated bluntly that criticizing the sale of computing power as "overbuilding" is "putting the cart before the horse," since current market demand for computing power continues to exceed supply.

On a data level, Thill cited Jefferies industry research showing Meta’s current internal infrastructure utilization at about 65%, with 35% of capacity idle. Selling this portion externally would directly improve overall utilization, investment returns, and increase cash flow, thus providing ammunition for further capital expenditure, rather than reflecting a retrenchment intent. Zuckerberg also said in last year’s earnings call that he expects Meta will be able to rent out excess computing power “at some premium.”

Thill concludes that Meta is "not withdrawing from the AI race, but is turning early aggressive capacity commitments into an option that creates strategic value."

The Cloud Computing Market Faces New Variables

No matter how Wall Street interprets Meta’s motives, this potential entry will directly impact existing cloud computing players. After Bloomberg’s report was published, shares of cloud computing vendors CoreWeave and Nebius immediately fell, reflecting market concerns about a new competitor squeezing existing market share.

Meta’s next moves will largely reveal the true answer to this question of "expansion or retreat." For investors, the key point is whether the company can successfully transform infrastructure from a cost center to a revenue stream, while maintaining its competitive position on the AI frontier.

Risk Disclosure and DisclaimerThe market involves risks and investments need caution. This article does not constitute personal investment advice, nor does it take into account any individual user’s specific investment objectives, financial situation, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article fit their particular circumstances. Any investment based on this is at your own risk. ```