Key Takeaways
- Meta Platforms is launching a neocloud initiative to sell external computing capacity, monetizing its massive data center infrastructure.
- Shares have climbed approximately $50 following the neocloud strategy reveal.
- Wolfe Research maintains Outperform rating with $800 price target; META currently at $605.72.
- Wolfe has increased its fiscal 2027 capital expenditure projection for Meta to $220 billion, significantly exceeding Street consensus of $160 billion+.
- The company expects 2026 capex between $125–$145 billion and recently commenced construction on an AI-focused data center in Canada.
Meta Platforms (META) shares are changing hands at approximately $605.72, gaining $2.60 in today’s session, as two positive developments spotlight the tech giant’s artificial intelligence infrastructure expansion.
During this week’s Mad Money broadcast, Jim Cramer highlighted Meta’s strategic decision to enter the neocloud market, describing the initiative as shrewd. The social media behemoth, historically among the largest purchasers of computing resources, is now positioning itself as a seller.
This strategic shift triggered concern among existing players. Neocloud-focused equities experienced selling pressure last week when Meta revealed its plans to compete in their market segment.
Cramer dismissed the pessimistic interpretation. He contended that the ability to lease computing power at attractive margins indicates insufficient data center supply rather than excess capacity. META shares have appreciated roughly $50 since the announcement.
Wolfe Elevates Capital Spending Projection
Wolfe Research reaffirmed its Outperform stance on META Thursday, maintaining its $800 price objective. Shares currently trade considerably beneath that level at approximately $605.72 — retreating from the 52-week peak of $796.25.
The firm’s more significant adjustment concerned its capital expenditure outlook. Wolfe now anticipates Meta will allocate $220 billion toward infrastructure during fiscal 2027, marking a substantial increase from its previous $15 billion capacity projection. This forecast considerably exceeds Wall Street’s consensus estimate of $160 billion or higher.
Wolfe additionally revised its capacity projection upward, now forecasting Meta will possess roughly 17 gigawatts of capacity in the coming year, elevated from its earlier 15 gigawatt estimate.
The research house had previously indicated Meta would likely escalate capital expenditures and might pursue additional capital through debt instruments or equity offerings to finance these investments.
For 2026, Meta’s capex is forecast at $125–$145 billion, representing a substantial jump from previous projections. Wolfe emphasized Meta must demonstrate to investors credible, sustainable revenue streams beyond advertising to support such spending magnitudes.
Meta presently maintains a 25% return on invested capital and a debt-to-equity ratio of 0.36.
Canadian Facility Launch and Advertising Technology Enhancement
On the infrastructure front, Meta recently initiated construction on a new computing facility in Sturgeon County, Alberta — marking its inaugural Canadian location and 33rd worldwide. The site is engineered for artificial intelligence operations, represents more than CAD $13 billion in investment, and is projected to generate approximately 3,000 construction positions and over 300 permanent employment opportunities.
Meta is simultaneously incorporating its Muse Image model into its Advantage+ creative advertising platform, introducing visual reasoning and self-refinement capabilities to its advertisement generation technology.
Erste Group elevated META from Hold to Buy this week, referencing the company’s AI investment trajectory. Truist Securities likewise retained its Buy rating, highlighting Meta’s AI distribution edge via the Muse Spark platform.
CEO Mark Zuckerberg has recognized that AI agent evolution has progressed more gradually than anticipated. In separate developments, investor Michael Burry has established short positions throughout AI infrastructure equities.
Meta stock trades at $605.72, with Wolfe Research’s $800 price objective suggesting approximately 32% appreciation potential from present levels.
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