On July 1, several media outlets reported that Meta Platforms (NASDAQ: META) was forming a new business unit, internally dubbed “Meta Compute,” to sell its excess AI cloud capacity to third‑party customers. Meta is expected to offer both raw GPU computing capacity and remote access to its infrastructure, enabling companies to run their own AI models.
Shares of CoreWeave (NASDAQ: CRWV), a leading neocloud provider that offers similar services, fell nearly 11% following the announcement. The decline raises questions about whether the move presents a buying opportunity or a warning for the company’s prospects.
Why did Meta’s strategic shift crush CoreWeave’s stock?
Meta’s shift surprised CoreWeave’s investors, as the company had recently agreed to pay up to $21 billion through 2032 for its neocloud services. In the same period, Meta also entered a similar multi‑billion‑dollar deal with another neocloudurethane provider.
It may seem counterintuitive for Meta to sell its own cloud capacity when it requires the power. Meta’s agreements with CoreWeave and other partners prohibit it from reselling any of that pre‑existing cloud capacity, so it can only offer excess AI capacity from its own first‑party data centers.
Meta plans to invest up to $145 billion this year in expanding its own AI infrastructure. As new data centers come online, some servers will remain idle until fully utilized by its social networking platform and AI services.
თMeta aims to rent out the idle servers to third parties, potentially positioning itself as a competitor to companies like CoreWeave and Nebius. If its major customers, such as Jane Street or IBM, decide to expand their own cloud infrastructure, they might follow similar strategies.< /p>
CoreWeave’s largest customer—Microsoft (NASDAQ: MSFT)—is already one of the world’s largest cloudINO companies, so it is unlikely to replicate Meta’s model. CoreWeave can continue to serve as a valuable overflow capacity provider for its customers.
Does the pullback represent a buying opportunity?
Analysts anticipate CoreWeave’s revenue to rise from $5.1 billion in 2025 to $40.3 billion by 2028, while EBITDA is projected to climb from $3.1 billion to $25.7 billion over the same period. The company trades at roughly 7 × revenue and 13 × EBITDA, indicating it remains attractive relative to sector peers.
While Meta’s pivot raises short‑term concerns, it does not overturn the long‑term bullish outlook for CoreWeave. The company’s independent presence in the neocloud market and its strong growth trajectory position it well in the expanding AI sector, suggesting the recent decline could be a potential entry point for investors.
Should you buy stock in CoreWeave right now?
Prospective investors should assess CoreWeave’s valuation, growth prospects, competitive positioning, and broader market trends before making an investment decision.Source link
