The Meta Compute Debate | Diet TBPN

**John Coogan** (0:02)
Meta is selling compute. They're getting out of the computing business. They said, we don't need computers anymore to do what we need to do. We don't need them, we're going to be selling them. Meta platforms is developing plans for a cloud infrastructure business to sell access to AI computing power and models, competing with industry leaders like AWS and GCP.
The company is considering selling access to various AI models hosted on its existing AI infrastructure as well as raw computing capacity. As part of its Meta Compute Initiative, Meta plans to generate revenue from excessive computing power could help return its investment in AI infrastructure which includes hundreds of billions of dollars spent on data centers and expensive chips. And so lots of reactions to this. The NeoCloud market is selling off. Oddly enough, Meta has a bunch of NeoCloud contracts. Some of those companies are selling off because now they're a buyer and also a competitor.
Lots of different takes about Meta finding its footing, finding something that justifies the massive CapEx. Of course, Meta is-

**Jordi Hays** (1:03)
It's deeply confusing, John.

**John Coogan** (1:05)
Yeah. Is it?

**Jordi Hays** (1:06)
I mean, the whole thing. The whole thing. What's confusing about it? I think it is practical what they're doing.

**John Coogan** (1:13)
Yeah.

**Jordi Hays** (1:14)
But as somebody that I would say overall has been a big cheerleader for Meta, I think it's truly the best. In my view, it is a perfect business.
It doesn't give you a lot of confidence in the strategy overall. They're signing these Neo Cloud deals worth tens of billions of dollars. They're spending hundreds of billions of dollars. They can make the argument that these type of, like doing any type of Neo Cloud deals themselves is just good business. It's just the best way to get ROI today. It doesn't give you a lot of confidence that there's near-term products on the horizon for Meta that are going to be able to utilize that capacity themselves, which has clearly been their strategy. Mark and the team have never said, we want to be in the cloud business. They've talked about the possibility of it, but the stated goal of MSL is personal super intelligence.

**John Coogan** (2:18)
I was a fan of it, and I think you were a huge fan of it. You were like a maness on your phone, going around your social networks. That's my biggest bull case for all of this. There are so many different applications that I can imagine being a daily driver of in the Meta family of apps.
Oddly, none of that has really been even tried, in my opinion. It feels like a little bit early to call it.

**Jordi Hays** (2:41)
All we've really seen so far is Muse Spark.

**John Coogan** (2:46)
Good on benchmarks, decent.

**Jordi Hays** (2:48)
Again, not anything that anyone should really get that excited about.

**John Coogan** (2:55)
As an API provider.

**Jordi Hays** (2:56)
Exactly.

**John Coogan** (2:57)
They did announce that they were going to release it via an API. I don't think they have. They might still.

**Jordi Hays** (3:01)
It's a good model, sir, but I don't think it will have a lot of demand. Then we've seen Meta Vibes, which was a mid-journey wrapper.

**John Coogan** (3:09)
Even if Muse Spark is not on the super-gega frontier, can it be good enough to get some work done inside Meta family of apps? It should, I would imagine, yes, but they just haven't found that killer feature. There are plenty of applications that are AI powered. There are plenty of models out there that have found their footing without being on the super-intelligence path or on that particular curve.

**Jordi Hays** (3:36)
It's interesting because yesterday we were talking about the story where Google had been telling Meta like, hey, we don't have the capacity for you, and here Meta is with plenty of capacity themselves. I don't think we can read too much into this because it's just one article from Bloomberg.
I think it will matter a lot who the potential buyers of Compute are going to be. If there's a number of companies that I think the market would get excited about, but if they're actually just going and trying to compete as...

**John Coogan** (4:06)
Yeah, it's weird that it came as a leak around a plan to sell Compute as opposed to just what SpaceX did where it was just like boom, huge contract with Anthropic, lots of excitement going into the IPO. That was such a perfectly massaged story as SpaceX entered the public markets.
That would have been great if they just said, hey, we have a Frontier Lab that's paying us a billion dollars a month now. And it's going to show up in earnings next quarter. Get ready. But the stock market loved it. The stock is way up. And I don't know if it's way up because they see it as a huge growth area for Meta. Now, is it that crazy that a hyperscaler could have a cloud platform?