Meta, the social media giant behind Facebook and Instagram, is making waves on Wall Street and across the tech landscape as it sets its sights on a new frontier: cloud computing. This bold move—announced in early July 2026—comes after a year of lackluster stock performance, mounting investor pressure, and an AI arms race that has exposed both the company’s ambitions and vulnerabilities.
Meta’s stock soared nearly 9% on July 1, 2026, after reports from Bloomberg and other outlets revealed that CEO Mark Zuckerberg is preparing to launch a business selling cloud infrastructure services. The plan: let outside developers pay to access and run AI models—including Meta’s own new multimodal model, Muse Spark—on Meta’s formidable data center infrastructure. The company is also considering selling raw computing capacity, much like neocloud competitors CoreWeave and Nebius.
“Meta would run the data centers and chips that power the models, including its own Muse Spark models, and charge developers to access them,” Bloomberg reported. The news sent ripples through the tech sector, with shares of CoreWeave and Nebius plunging 14% and 17% respectively on the day the news broke, according to Axios.
For Zuckerberg and his team, this is more than just a side project. After pouring hundreds of billions into AI infrastructure and facing skepticism about whether those investments would ever pay off, Meta is under pressure to deliver new revenue streams beyond its core advertising business—which still accounts for a staggering 98% of the company’s income. “Making this as a revenue stream has been part of their road map,” said Karan Ramchandani, managing director at advisory firm Post Oak Group, as quoted by CNBC. “It seems like a no-brainer to compete in the market, to sell compute power to other B2B players.”
The scale of Meta’s infrastructure is nothing to sneeze at. Bernstein analyst Madison Rezaei estimates Meta has already built out 20 gigawatts of global data center capacity, with plans to add another 14 gigawatts in the coming years. “This scale easily rivals cloud provider footprints,” Rezaei wrote in a research note, according to Axios. In comparison, Amazon’s AWS celebrated a $150 billion revenue run-rate this year, marking two decades at the top of the cloud market.
But why now? The answer lies in a confluence of factors. First, the AI boom has driven insatiable demand for data processing power, with companies clamoring for access to the latest models and the hardware needed to run them. Second, Meta’s own AI ambitions have hit roadblocks. Earlier in 2026, Google cut Meta off from its superior Gemini AI capacity, leaving Zuckerberg’s company scrambling to keep its own AI projects afloat, according to the Financial Times as cited by Futurism. The loss of access slowed down Meta’s efforts in data moderation and customer service, and highlighted the company’s heavy reliance on competitors’ technology.
Despite committing over half a trillion dollars to AI over the next two years, Meta’s in-house models—like the open-source Llama—have lagged behind. The company even initially encouraged employees to use AI liberally, but had to walk that back, urging staff to be more frugal with AI tokens as costs mounted. Morale reportedly hit rock bottom, with infighting, executive departures, and PR crises compounding the challenges.
Enter Muse Spark, Meta’s new multimodal reasoning AI model, which the company describes as “the first step on our scaling ladder and the first product of a ground-up overhaul of our AI efforts.” According to sources cited by the Financial Times, Meta needed Google’s help to get Spark off the ground—a fact that underscores the uphill battle the company faces in reducing its dependence on external AI providers.
For Wall Street, Meta’s cloud ambitions are a double-edged sword. On one hand, investors have been clamoring for the company to diversify and monetize its massive infrastructure investments. On the other, cloud infrastructure is a notoriously tough business, with much slimmer margins than Meta’s lucrative ad empire. As CNBC pointed out, Meta’s gross margin currently sits at an enviable 82%, while Google’s cloud business—after years of losses—recently reached an 18% margin. “Anything it enters outside of online ads would be dilutive to their business and would lower their margins from their glory days,” said Paul Meeks, head of technology research at Freedom Capital Markets.
Still, the potential upside is hard to ignore. Mark Zuckerberg himself has acknowledged the interest from outside parties. At Meta’s annual shareholder meeting in May, he told investors that selling compute is “definitely on the table,” adding, “almost every week there are different companies that come to us from outside asking us to both stand up an API service, or asking if we have compute that they could buy from us at some premium to what we’ve bought it at.”
Meta’s capital expenditures guidance for 2026 was recently raised by $10 billion to $145 billion, some of which is being funded through a $25 billion bond sale. The company has also rolled out new paid subscription plans for Instagram, Facebook, WhatsApp, and its Meta AI app—part of a broader push to reduce reliance on advertising and tap into new sources of income. Notably, Meta’s smart glasses subscriptions now cost $20 per month for full access to AI features.
But challenges remain. The company has laid off about 10,000 employees so far this year, and its stock had slumped nearly 25% over the previous four quarters before the July rally. The move into cloud is seen by some as a response to complaints that Meta may be overspending and skepticism that it will ever earn a commensurate return on its capex. “The problem with this company is that it only builds, or only thus far, capacity for itself, and it’s not really monetizing any AI apps yet,” said Meeks.
Industry observers are watching closely to see if Meta will attempt to challenge the big three hyperscalers—Amazon, Microsoft, and Google—or if it will carve out a niche more akin to neoclouds, specializing in AI-specific compute products. Either way, the move is already shaking up the market, with neocloud stocks tumbling and analysts debating the long-term implications for Meta’s business model.
As the generative AI boom enters its fourth year, the demand for compute shows no sign of slowing. For Meta, the cloud could represent both a lifeline and a leap into uncharted territory. Whether Zuckerberg’s gamble pays off—or further exposes the company’s vulnerabilities—remains to be seen, but one thing is certain: the race for AI dominance is far from over.