Meta Plans to Sell Excess AI Computing Power — Here’s Why CoreWeave and Nebius Are Falling

TLDR

• Meta is building a cloud business to sell excess AI computing capacity, competing with existing providers
• CoreWeave fell nearly 14% and Nebius dropped 17% on the news
• Meta holds $21 billion and $27 billion commitments with CoreWeave and Nebius respectively
• Analysts warn the CoreWeave business model could become unsustainable as competition grows
• Nebius shows faster growth and cleaner finances, while CoreWeave carries $24.9 billion in debt

Meta Platforms is building a cloud infrastructure business to sell its excess AI computing power. The move rattled markets, sending shares of AI cloud specialists CoreWeave and Nebius sharply lower on July 2.

CoreWeave, Inc. Class A Common Stock, CRWV

Bloomberg first reported the story, citing people familiar with the matter. Meta’s internal initiative, called Meta Compute, is exploring selling access to AI models and raw computing capacity.

The plan mirrors Amazon Web Services’ Bedrock offering. Meta CEO Mark Zuckerberg had previously hinted at this, telling investors that excess AI infrastructure could become a revenue stream.

CoreWeave shares fell 13.9% to $85.68. Nebius dropped 17% to $229.18. CoreWeave is now down about 48% from its 52-week high, while Nebius is off around 24% from its peak.

The sell-off wasn’t just about new competition entering the market. It was about who that competitor is.

Meta is one of the largest customers for both companies. CoreWeave has a $21 billion commitment from Meta. Nebius holds an agreement worth up to $27 billion. If Meta builds enough capacity to sell the excess, it may eventually need to rent less from them.

Analyst Reaction

Bernstein said the news is “problematic for CoreWeave” and warned that competition from hyperscalers has been coming for some time. The firm said it believes the CoreWeave business model will become unsustainable.

DA Davidson noted that the impact falls hardest on smaller cloud providers, not the big players. “Those companies like CoreWeave and Nebius rely on Meta for their growth and Meta may not need them anymore,” the firm said.

SpaceX has already followed a similar path. It began selling excess computing capacity this year, signing deals with Anthropic, Google, and Reflection AI worth over $2 billion per month combined.

Bitcoin mining companies including Mara Holdings, Hive Digital, and Hut 8 have also entered the AI cloud space, adding further competitive pressure.

CoreWeave vs. Nebius: Which Stock Holds Up Better?

CoreWeave is the larger company. First-quarter revenue rose 112% year over year to $2.08 billion, with a revenue backlog of $99.4 billion. Full-year guidance stands at $12 billion to $13 billion.

But costs are mounting. Net loss widened to $740 million in Q1. Total debt reached $24.9 billion. Interest expense nearly consumed half of adjusted EBITDA.

Nebius is smaller but growing faster. First-quarter revenue jumped 684% year over year to $399 million. The company is guiding for $3 billion to $3.4 billion in revenue for 2026.

Nebius ended Q1 with $9.3 billion in cash, including a $2 billion investment from Nvidia. Its adjusted net loss was $100.3 million, far smaller than CoreWeave’s.

The trade-off is valuation. Nebius trades at roughly 18 times forward revenue. CoreWeave trades at around 3.7 times, but that cheaper price sits beneath nearly $25 billion of debt.

Both stocks carry real risk. But Nebius pairs faster growth with expanding margins and a stronger balance sheet.

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