Meta Stock Rebound Propels Mark Zuckerberg to World’s Fifth-Richest Status at $222 Billion

Key Points

• Meta shares received an early July uplift following Bloomberg’s report that the company may offer cloud computing services to external AI firms.

• CNBC reported on Friday that Anthropic is potentially set to become a $10 billion client for Meta’s cloud infrastructure.

Meta Platforms (NASDAQ: META) stock experienced significant volatility last week, peaking at an intraday high of $686 before retracing to close the week just above $646 — a level last observed in April.

Following Meta’s stock rebound, CEO Mark Zuckerberg — who holds approximately 13.5% of the company per S&P Global Market Intelligence — has ascended to the position of the world’s fifth-richest individual, with an estimated net worth of $222 billion according to Bloomberg.

Image source: The Motley Fool.

What’s driving Meta stock higher?

Meta’s recent trajectory represents a notable reversal of fortune.

After enduring a prolonged downturn throughout June, Meta’s shares began to recover following announcements — corroborated by Bloomberg — that the company is reevaluating its AI strategy. Specifically, Meta is exploring a shift toward providing cloud computing resources to third-party AI developers, rather than pursuing dominance in the AI sector independently.

Such a strategic pivot could prove advantageous given the current market landscape.

Wall Street analysts project Meta’s capital expenditures could reach $140 billion this year, yet the tangible returns on these investments remain elusive. Given the dominance of alternatives such as Gemini, ChatGPT, and Claude in the AI marketplace, demand for Meta’s proprietary AI solutions appears limited. Consequently, BMO analyst Brian Pitz has characterized Meta as ‘the least visible AI ROI story’ in the sector.

Even if Meta fails to establish a competitive AI offering of its own, the company could still generate substantial revenue by leasing its computational infrastructure to external AI enterprises. Yahoo Finance suggested last week that such a strategy might yield billions in annual income, a notion subsequently validated by CNBC’s reporting on Friday.

Meta is reportedly engaged in ‘very preliminary talks’ to lease its computing infrastructure to external AI firms, with potential contracts valued at up to $10 billion.

How to value Meta stock

Following its recent share price appreciation, Meta’s stock trades at approximately 24 times earnings, with projected annual earnings growth of nearly 20% over the next five years. Despite a modest 0.3% dividend yield, the valuation appears reasonable rather than excessively expensive.

Investors should monitor Meta’s capital expenditures closely, as elevated spending currently results in free cash flow trailing net income by roughly 30%. However, should the company successfully manage its outlay while generating revenue through cloud computing services for AI partners, the stock could present a compelling investment opportunity.

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