There’s a lot of disinformation going around about $META “cutting capex” because they “overbuilt”.
This is an “if” they have excess capacity.
And it looks like the opposite right now:
Hyperscalers like $GOOGL are so compute constrained that they had to cut allocations to Meta back in March.
Since Meta was using too much for internal projects.
Meta was immediately constrained so it looks like they were forced to immediately sign massive $48B+ contracts with Neoclouds like $CRWV and $NBIS.
Meta is selling excess capacity if there’s any, especially since their large contracts are take or pay from the Neoclouds.
If anything, I’m expecting their guided capex to go up as they build out more independent capacity.
$META is now reportedly building an AI cloud business.
Of course, bots have tanked $NBIS in premarket, which basically means bots are retards.
First, Meta is late to this party. Whatever they build over the next three years, they would already have that today had they started three years ago, when they probably should have.
Second, Nebius is likely ahead on agent-native cloud stack and inference. Meta is the one that needs to catch up, not Nebius. If anything, this validates Nebius.
Third, compute is supply-constrained, and this does not take anything away from Nebius. If anything, a business like Meta joining the AI cloud race is a positive signal for ROI on AI cloud capex.
In short, this is great news for Meta, Nebius, and the AI cloud sector.
$NBIS should be up 10% on this news.
(Not investment advice.)
What triggered this selloff in AI infrastructure stocks was the "excess capacity."
Algos saw the headline and immediately assumed the AI buildout was slowing down.
But is it really excess capacity if you can resell it at higher prices than you paid for it?
I don’t think so.
What triggered this selloff in AI infrastructure stocks was the "excess capacity."
Algos saw the headline and immediately assumed the AI buildout was slowing down.
But is it really excess capacity if you can resell it at higher prices than you paid for it?
I don’t think so.
$NBIS is down 10% following reports that $META is developing a cloud business to sell access to excess AI compute.
This was something that had been expected for a long time.
Meta has been pushing CapEx as aggressively as possible because any potential excess capacity could always be resold later anyway. Mark Zuckerberg said as much back in May.
It doesn’t change anything for $NBIS IMO.
Quick reminder: Nebius has a $12B contract with Meta, plus a $15B backstop. And according to Nebius’ management, they don’t expect to use a single dollar of that backstop for Meta. Instead, that capacity should be sold to enterprise customers at higher margins, because the demand is clearly there.