Key Takeaways
- Meta’s stock climbed 8.8% Wednesday following reports the company intends to offer surplus AI computing power as a commercial cloud service
- Shares retreated to flat territory in Thursday’s premarket trading amid doubts about available excess capacity
- SoftBank revealed plans to launch SB Neo, a competing neocloud venture targeting the same market
- SB Neo aims to reach 10 gigawatts of data center capacity by approximately 2030
- Existing neocloud providers CoreWeave and Nebius plunged 13.9% and 17% on concerns that Meta could shift from partner to rival
Shares of Meta (META) rocketed 8.8% higher Wednesday following a Bloomberg report suggesting the social media giant is working on plans to commercialize its surplus AI computing infrastructure as a cloud offering. However, by Thursday’s premarket session, the enthusiasm had evaporated with the stock returning to approximately break-even levels.
Meta has not publicly verified the report. Nevertheless, market participants responded enthusiastically to the prospect of the company generating additional revenue from its substantial AI infrastructure investments.
The complication? Meta might not actually possess significant excess capacity available for commercial sale at this time.
Richard Windsor, an independent technology analyst at Radio Free Mobile, noted that Meta “doesn’t currently have any spare capacity to sell and has been unable to purchase the capacity from Google that it needed.” According to Windsor’s assessment, Meta would effectively need to halt its superintelligence development initiatives and suspend certain AI-powered features across its applications simply to create available capacity for external customers.
Meta has allocated up to $145 billion for capital expenditures this year. Skeptics are already raising concerns about whether launching a cloud infrastructure business alongside such massive spending makes strategic sense.
“Building data centers is operationally very difficult and hugely capital-intensive,” explained Paul Meeks, head of technology research at Freedom Capital Markets. “As a Meta shareholder, I’d rather see them continue with open models and monetize AI through products and services with much higher margins.”
SoftBank Launches Direct Challenge
Merely one day following the Meta speculation, SoftBank validated it is making a direct push into the neocloud sector. The Japanese conglomerate unveiled SB Neo Inc., a joint venture designed to lease AI processors and cloud computing infrastructure to major US corporations, including hyperscale providers.
SB Neo maintains a 51% ownership stake by SoftBank Corp., the telecommunications subsidiary, with the remaining 49% held by parent company SoftBank Group. The new entity is scheduled to officially commence operations this month.
Junichi Miyakawa, CEO of SoftBank Corp., characterized the move as “a second founding” for the organization, projecting the business holds potential to deliver profits “on a different order of magnitude.” Market analysts estimate the neocloud operation could expand SoftBank Corp.’s annual operating income three to four times, reaching between ¥3 trillion and ¥4 trillion ($18.5–$25 billion).
SB Neo intends to expand infrastructure gradually, targeting 10 gigawatts by 2030. Among the planned initiatives is a $500 billion data center facility in Ohio, potentially ranking among the world’s largest. SoftBank emphasizes its competitive advantage in power procurement, primarily through gas-powered generation facilities.
OpenAI, which has received approximately $65 billion in total commitments from SoftBank Group, may become an initial client of SB Neo.
Existing Neocloud Providers Under Pressure
The twin announcements delivered a significant blow to established neocloud companies. CoreWeave (CRWV) tumbled 13.9% while Nebius (NBIS) plummeted 17% during Thursday’s session. Both organizations currently provide AI computing infrastructure to Meta, and now confront the possibility of their largest client transforming into a direct competitor.
The neocloud sector is experiencing rapid consolidation of competitors. AWS, Microsoft Azure, and Google Cloud already provide AI computing services. With Meta, SoftBank, CoreWeave, and Nebius now all vying for market share, the competition for enterprise clients is intensifying dramatically.
SoftBank’s SB Neo anticipates commencing service delivery in the United States during the upcoming fiscal year.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
