Meta Platforms is reportedly in early talks to rent excess AI computing capacity to Anthropic under a two-year, $10 billion deal. The agreement would mark Meta's entry into cloud computing, though it is far from done and could still fall through. Meta has underperformed broader equities over the past year as the market questioned its AI spending.
Meta Platforms is reportedly in early talks to sign a two-year, $10 billion deal to rent excess AI computing capacity to Anthropic, the company behind the Claude family of large language models. The deal is far from done and could still fall through, but securing a client like this would be a great way for Meta to enter the cloud market.
Meta's cloud venture takes shape
Reports surfaced several weeks ago that Meta was planning to launch a cloud business, renting out spare AI computing capacity to other corporations. The Anthropic talks would be exactly that, and Anthropic is not a small client.
Anthropic has historically leaned on Amazon, the industry leader, for its cloud computing needs. Winning that business would give Meta a way into the cloud market.
$5 billion a year against $200 billion in sales
The money itself is modest next to Meta's scale. The social media company generated about $200 billion in sales last year, so an extra $5 billion per year may not move the needle.
However, if Meta secures this deal it might only be the first of many. Analysts project rapid expansion in AI infrastructure spending over the next several years, and Meta could sign similar deals with other big names.
The market has doubted the AI bill
Meta has ramped up spending to capitalize on what it perceives as a large opportunity in artificial intelligence, and the market does not see it the same way. The argument runs that the increased spending could lead to lower profits and margins if the company doesn't achieve the return on investment it expects.
Mark Zuckerberg, Meta's CEO, nonetheless remains bullish on AI. The stock last traded at $593.54, down $0.33, inside a 52-week range of $520.26 to $796.25.
Meta's core advertising business has improved thanks to AI, as sophisticated recommendation algorithms increased engagement across its websites and apps and made it easier for advertisers to launch campaigns. The company counts more than three billion daily active users, and it is still fine-tuning its cloud computing business.
Source: The Motley Fool
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