<p><strong>Meta Platforms</strong> <span class="ticker-mention inline-flex items-center font-bold">(META <span class="ml-1 text-red-900">1.56%</span>)</span> started the month with a bang. Its shares climbed 9% on July 1 after the company revealed that it will begin leasing some of its surplus computing power to customers. The launch of this new cloud computing business was in line with earlier comments from CEO Mark Zuckerberg, who said on Meta's first-quarter earnings conference call that the social media giant could sell some of its capacity at a premium if it feels that it has overbuilt for its in-house needs.</p>
<p>According to Bloomberg, Meta is still debating whether to offer AI models that run on its infrastructure, or simply sell direct access to computing power. Meta has developed its own large language models (LLMs), although they're primarily for internal use. Specifically, the company deploys these models to optimize its content recommendation engine, helping keep users on its sites longer, and to help advertisers better target and convert customers.</p>
<section><div><div><div><small><div>Expand</div></small></div><div><img alt="Meta Platforms Stock Quote" width="64" height="64" src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL01FVEEucG5nJnc9MTI4?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL01FVEEucG5nJnc9MTI4"/></div><div><h2>NASDAQ: META</h2><div>Meta Platforms</div></div></div><div><div><div>Today's Change</div><div>(-1.56%) $-9.60</div><div>Current Price</div><div>$605.98</div></div><div></div></div></div><div><div></div><div><h3>Key Data Points</h3><div><div>Market Cap</div><div><span class="inline-flex items-center gap-1">$1.6T<span class="group/market-cap relative inline-flex shrink-0 align-middle"><span></span><span id="_R_13a55tminr5uamivb_" class="sr-only">Market cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.</span><span class="pointer-events-none absolute z-50 mt-1 w-64 rounded-md bg-gray-900 px-3 py-2 text-xs leading-snug whitespace-normal! wrap-break-word normal-case! text-gray-50 opacity-0 shadow-lg transition-opacity group-hover/market-cap:opacity-100 group-focus-within/market-cap:opacity-100 top-full right-0 left-auto translate-x-0">Market cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.</span></span></span></div><div>Day's Range</div><div>$600.70 - $615.81</div><div>52wk Range</div><div>$520.26 - $796.25</div><div>Volume</div><div>128.3K</div><div>Avg Vol</div><div>17.5M</div><div>Gross Margin</div><div>81.94%</div><div>Dividend Yield</div><div>0.34%</div></div></div></div></section>
<p>Earlier this week, it introduced its first image generation model: Muse Image, which was developed by its Superintelligence Lab, and which will work in conjunction with its Muse Spark text model. Muse Image will help power Meta's advertiser-focused image generation tools to help marketers more easily create and adjust ad campaigns. Muse Image will be available to consumers for free on a limited basis, and Meta will also offer a monthly subscription. </p>
<p>Offering both cloud computing capacity and its AI models would help Meta compete with <strong>Amazon</strong>, <strong>Microsoft</strong>, and<strong> Alphabet</strong> -- the world's three biggest cloud computing providers -- and provide the company with another revenue source. Most importantly, though, the announcement should help ease investors' concerns about the company's high spending on AI infrastructure. Meta has announced plans to spend up to $145 billion on capital expenditures (capex) this year, largely tied to its AI efforts. Creating a cloud computing arm would allow it to allocate and shift compute capacity between itself and customers, giving it more flexibility.</p><div><div id="foolcom_sidebar_top_mobile_container"><div><div><div></div><div></div><div></div></div></div><div></div></div></div>
<div><img alt="Meta logo." width="880" height="587" src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84Nzc3NjUvbWV0YS5wbmcmdz0zODQw?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84Nzc3NjUvbWV0YS5wbmcmdz0zODQw"/>
<p>Image source: The Motley Fool.</p>
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<h2>Is the stock a buy?</h2>
<p>In my view, Meta is one of the most undervalued mega-cap tech stocks in the market today. It trades at a forward price-to-earnings (P/E) ratio of just 19 times 2026 analyst estimates and below 17 times 2027 estimates/ Meanwhile, in Q1, it grew its revenue by 33% year over year.</p><div></div>
<p>Meta has been one of the best companies at applying AI to its core business to drive growth, and its new cloud computing unit should help allay investors' fears about its capex plans. Given its valuation and growth, and the removal of that overhang, I would be a buyer of the stock at current levels.</p><div id="article_pitch_container"><div><div><div></div><div></div><div></div><div></div><div></div><div></div><div></div></div></div><div></div></div><div id="promobox_container"><div><div><div></div><div></div><div></div><div></div></div></div><div></div></div>

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<p>Meta Platforms shares surged 9% after announcing a new cloud computing business to lease surplus computing power. This move, aligned with CEO Mark Zuckerberg's earlier comments, aims to generate revenue and offset high AI infrastructure spending. Meta is considering offering both direct compute access and its own AI models to compete with major providers like Amazon and Microsoft.</p>

- Meta Platforms' shares rose 9% on July 1 after announcing plans to lease surplus computing power, aligning with CEO Mark Zuckerberg's earlier comments about potential sales.  
- The company is contemplating whether to offer AI models or just sell access to computing power, aiming to enhance ad targeting and user engagement.  
- Expanding into cloud computing could provide a new revenue stream and ease investor concerns over high spending on AI infrastructure.

Mark Zuckerberg's Meta Stock Surged 9% on New Cloud Business Plan