Meta Platforms is weighing a plan to sell excess AI data-center capacity to outside companies, a move Motley Fool analyst Brett Schafer reads as a bearish signal rather than a growth story. The stock trades below $600, but he says earnings pressure from surging capital spending makes it a pass for now.
Meta Platforms trades below $600 a share, at $589.85, and Mark Zuckerberg's team is now weighing whether to sell some of the company's compute power as a new AI cloud business. Motley Fool analyst Brett Schafer says that plan is a warning sign, not a reason to buy.
A cloud business born from excess capacity
Meta spent $30 billion on capital expenditures last quarter, nearly double the year-ago figure. It expects $130 billion to $145 billion in capex for the full year, mostly tied to artificial intelligence.
Meta's AI models see little external use, so the company is sitting on data-center capacity it isn't using. Zuckerberg said other AI companies have approached Meta to buy compute access at a premium over the purchase price, though the exact financial terms remain unclear.
Schafer compares the potential opportunity to deals signed by Space Exploration Technologies, which are set to generate tens of billions in annual revenue, arguing Meta could grow such a business quickly if it chose to.
Advertising holds up, but margins slip
Schafer calls the prospect of selling spare compute a bearish signal, since it suggests Meta cannot find ways to directly monetize the AI services it has spent tens of billions building. Third-party estimates put Meta's AI chatbots at just a sliver of market share behind Alphabet's Gemini, OpenAI's ChatGPT and Anthropic's Claude, according to the analyst. Still, Meta's advertising business across Facebook, Instagram and WhatsApp keeps growing, with revenue up 28% year over year to $61 billion last quarter. That growth hasn't kept pace with AI and Reality Labs spending, however, and operating margin fell from 43% a year earlier to 31% in Q2 2026.
Cheap stock, shrinking earnings
Meta's operating earnings fell last quarter for the first time in a long while, and trailing 12-month EBIT stood at $87 billion. Schafer expects that figure to keep falling if capex keeps rising without a clear AI business model, as depreciation flows through the income statement faster than advertising can offset it. The stock trades at a price-to-earnings ratio of 22, a discount to big tech peers, but Schafer says he doesn't think Meta is a buy unless it reverses its AI spending or finds a way to monetize it at scale.
Source: The Motley Fool
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