Meta Stock Jumps 9% on Cloud Plans — SoftBank Just Made the Cloud Race a Lot More Crowded

TLDR

• Meta stock jumped 8.8% Wednesday after reports it plans to sell excess AI computing power as a cloud service
• Meta stock was flat in Thursday’s premarket as questions emerged about its actual spare capacity
• SoftBank announced it is entering the same neocloud space with a new venture called SB Neo
• SB Neo plans to scale to 10 gigawatts of data center capacity by around 2030
• CoreWeave and Nebius, current Meta neocloud partners, dropped 13.9% and 17% respectively on fears of Meta becoming a competitor

Meta (META) stock surged 8.8% on Wednesday after Bloomberg reported the company is developing plans to sell excess AI computing power as a cloud service. By Thursday premarket, the stock had given back those gains and was trading roughly flat.

Meta Platforms, Inc., META

The report has not been confirmed by Meta. But the reaction was swift — investors liked the idea of Meta turning its massive AI infrastructure spending into a new revenue stream.

The catch? Meta may not have much spare capacity to sell right now.

Independent analyst Richard Windsor of Radio Free Mobile wrote that Meta “doesn’t currently have any spare capacity to sell and has been unable to purchase the capacity from Google that it needed.” Windsor added that Meta would essentially need to pause development of superintelligence and pause some AI features in its apps just to free up capacity to offer to others.

Meta has committed up to $145 billion in capital expenditure this year. Critics are already questioning whether adding a cloud operation on top of that makes financial sense.

“Building data centers is operationally very difficult and hugely capital-intensive,” said 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 Makes Its Move

Just a day after the Meta report, SoftBank confirmed it is entering the neocloud space directly. The company announced the formation of SB Neo Inc., a joint venture that will rent AI chips and cloud computing resources to large US companies, including hyperscalers.

SB Neo is 51% owned by SoftBank Corp., the mobile telecom unit, and 49% by its parent SoftBank Group. The venture is set to formally launch this month.

SoftBank Corp. CEO Junichi Miyakawa called it “a second founding” for the company, and said the business has potential to generate profit “on a different order of magnitude.” Analysts suggest the neocloud business could triple or quadruple SoftBank Corp.’s annual operating income to between ¥3 trillion and ¥4 trillion ($18.5–$25 billion).

SB Neo plans to ramp up capacity in phases, with a goal of 10 gigawatts by 2030. One planned project is a $500 billion data center in Ohio, which would be among the largest in the world. SoftBank says it has a key edge in securing power, mainly from gas-fired plants.

OpenAI, in which SoftBank Group has committed roughly $65 billion total, could become an early customer of SB Neo.

Pressure on CoreWeave and Nebius

The announcements hit existing neoclouds hard. CoreWeave (CRWV) fell 13.9% and Nebius (NBIS) dropped 17% on Thursday. Both companies currently supply AI computing resources to Meta, and face the prospect of their biggest customer turning into a competitor.

The neocloud market is getting crowded fast. AWS, Microsoft Azure, and Google Cloud all offer AI computing access. Meta, SoftBank, CoreWeave, and Nebius are all now competing for the same pool of enterprise customers.

SoftBank’s SB Neo is expected to begin offering services in the US during the next fiscal year.

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