Key Takeaways
- Meta shares climbed 8.8% Wednesday following reports of plans to commercialize surplus AI computing infrastructure as a cloud offering
- Shares retreated to flat levels in Thursday premarket trading amid skepticism about available computing capacity
- SoftBank revealed its entrance into the neocloud sector through a newly formed entity, SB Neo
- The SB Neo venture targets 10 gigawatts of data center infrastructure by approximately 2030
- Existing neocloud providers CoreWeave and Nebius, both Meta partners, plunged 13.9% and 17% on concerns about emerging competition
Shares of Meta (META) jumped 8.8% during Wednesday’s trading session after Bloomberg published a report indicating the social media giant is formulating strategies to commercialize surplus AI computing resources through a cloud service platform. However, by Thursday’s premarket session, the rally had completely evaporated with shares trading essentially unchanged.
Meta has not officially verified the report. Nevertheless, the market’s initial response was positive — shareholders embraced the concept of the company monetizing its substantial AI infrastructure investments through an additional revenue channel.
The complication? Meta likely lacks significant excess capacity available for commercial sale at present.
Richard Windsor, an independent technology analyst at Radio Free Mobile, observed 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 further suggested that Meta would essentially need to halt superintelligence development efforts and scale back certain AI functionality within its applications simply to generate capacity for external customers.
Meta has allocated up to $145 billion in capital expenditure for this year. Skeptics are already raising concerns about whether launching a cloud services operation alongside that investment makes strategic sense.
“Building data centers is operationally very difficult and hugely capital-intensive,” explained 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 Enters the Arena
Merely one day following the Meta cloud service speculation, SoftBank confirmed its direct entry into the neocloud marketplace. The Japanese conglomerate unveiled the establishment of SB Neo Inc., a collaborative venture designed to lease AI processors and cloud computing infrastructure to major US corporations, including hyperscale providers.
SB Neo maintains a 51% ownership stake from SoftBank Corp., the telecommunications subsidiary, with the remaining 49% held by parent company SoftBank Group. The venture is scheduled to officially commence operations this month.
Junichi Miyakawa, CEO of SoftBank Corp., characterized the initiative as “a second founding” for the organization, projecting the business could deliver profits “on a different order of magnitude.” Market analysts estimate the neocloud operation could triple or even quadruple SoftBank Corp.’s annual operating income, reaching between ¥3 trillion and ¥4 trillion ($18.5–$25 billion).
SB Neo intends to expand capacity incrementally, targeting 10 gigawatts by 2030. Among the planned initiatives is a $500 billion data center facility in Ohio, which would rank among the world’s largest. SoftBank emphasizes its competitive advantage in power procurement, primarily through gas-fired generation facilities.
OpenAI, which has received approximately $65 billion in total commitments from SoftBank Group, may become an initial client of SB Neo.
Existing Players Feel the Heat
The dual announcements delivered a significant blow to established neocloud operators. CoreWeave (CRWV) declined 13.9% while Nebius (NBIS) tumbled 17% during Thursday’s session. Both firms currently provide AI computing infrastructure to Meta, and now confront the reality of their largest client potentially transforming into a direct rival.
The neocloud sector is rapidly becoming saturated with competitors. AWS, Microsoft Azure, and Google Cloud already provide AI computing services. With Meta, SoftBank, CoreWeave, and Nebius all vying for position, the competition for enterprise clients is intensifying.
SoftBank’s SB Neo is projected to begin commercial service delivery in the United States during the upcoming fiscal year.
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