Meta to Build Cloud Business to Sell Excess AI Compute

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, podcasts, radio, news. Bloomberg Tech is live from the heart of Silicon Valley with Ed Ludlow in San Francisco.

**Ed Ludlow** (0:22)
This is Bloomberg Tech coming up. Meta goes after the cloud giants with plans to develop its own cloud infrastructure business. Plus the Trump administration lifts foreign access restrictions on Anthropic's Fable 5 AI model. And we're joined by Lime CEO, Wayne Ting, as the company gets ready to debut on the NASDAQ.
Meta is taking on the cloud giants. That's the headline driving the stock to its biggest jump in a year. After Bloomberg reported the company's developing plans to build a cloud business with two parts. First, selling API access to AI models running on Meta's infrastructure. Second, renting out raw AI computing power from its massive data center footprint. That's all according to sources. Now, the market reaction is telling. CoreWeave is heading for its biggest drop since February, down 15%.
As investors weigh a new powerful competitor in AI compute, but you see Amazon, Microsoft higher. Maybe that reflects the scale of opportunity. Maybe they're just so entrenched in cloud computing. The market's not worried. Let's get straight to Bloomberg Tech managing editor, Linduan. Okay, let's go back over the reporting. This is us saying that Meta is moving forward with something in two parts. What do we need to know?

**Linduan** (1:35)
That's right. So they're developing the plans as we speak to develop a cloud business. And that could come in the form of many things, right? It could come in the form of them taking the giants, the giant hyperscalers like Amazon, Microsoft, and Google head on in supplying the kind of cloud computing that people like Bloomberg and other companies use through these companies. It could also mean that they're just talking about selling excess AI computing power specifically. In that case, they would go head on with the so-called CEO clouds like CoreWeave, as you mentioned, which is why CoreWeave is, I was just looking at the Bloomberg Terminal and the share moves on both of the stocks.
CoreWeave is now officially down more than Meta is up, and so clearly a lot of investors are fearing that Meta is going to take that second route and go head on with the companies like CoreWeave.

**Ed Ludlow** (2:29)
The idea of Meta leveraging its excess compute capacity is something that Mark Zuckerberg talked in the most recent earnings call. But we actually have more detail in our report. We know who's running this plan, who are the executives involved, and I guess like do we have a sense of how much progress they've made?

**Linduan** (2:47)
Yeah, I mean, clearly they are still in conversations about it. As we pointed out in the story, the conversations are early on enough that they may decide to change their minds. But as you had pointed out, Zuckerberg has telegraphed this not just in the last earnings call, but in several earnings calls over the past several months. I remember as far back as January, when analysts were asking him as part of their earnings call, what they were going to do if they didn't need all of the AI computing power that they were buying up in the market. And Zuckerberg was even back then saying, don't worry, if we don't use it, somebody else will and we'll find a way to resell it. And so I can imagine that this has been in the works and has been talked about internally at META for several months now.

**Ed Ludlow** (3:32)
We're reporting, this is called Meta Compute, led by Santosh Dhanardhan, Meta's head of infrastructure, Daniel Gross on the super intelligence team, and Meta president, Dina Palma Cormack. Lots of detail, lots of impact in the markets, Bloomberg's Linda Wan, thank you very much. Let's widen the lens. Meta's plan was initially seen as a big win for the company, right, that's reflected in the stock. But it has also raised fresh questions about the rest of the AI trade. With investors reassessing some of the companies, powering the AI build out. Bigger picture, this is what markets look like. Then as that 100 is down a percentage point, as we enter the second half of this year and the third quarter of this year, the story hasn't changed. AI spending remains enormous, earnings are holding up, and investors are looking beyond hyper scalers for the next opportunity. The picks and shovels are being impacted in the moment, right? The Philadelphia Semiconductor Index also much softer in the session. But as we've just reported, it's come off its biggest course ever in the second quarter. There's a lot to unpack. Seema Shah, Chief Global Strategist at Printable Asset Management is with us.