<p><span>On July 1, several media outlets reported that </span><strong>Meta Platforms </strong><span><span class="ticker-mention inline-flex items-center font-bold">(META <span class="ml-1 text-green-900">+6.16%</span>)</span> was forming a new business unit, internally dubbed &#34;Meta Compute&#34;, to sell its excess AI cloud capacity to third-party customers. Meta </span><span>will</span><span> reportedly sell both its raw GPU computing capacity and remote access to its infrastructure to companies so they can run their own AI models. </span></p>
<p><span>Shares of </span><strong>CoreWeave</strong><span> <span class="ticker-mention inline-flex items-center font-bold">(CRWV <span class="ml-1 text-red-900">0.87%</span>)</span>, a leading neocloud provider that provides many of the same services, have dropped nearly 11% since that news broke. Does that pullback represent a buying opportunity or a dire warning for the company's future?</span></p>
<div><img alt="An illustration of an AI chip." width="880" height="518" src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84NzgyODAvZ2V0dHlpbWFnZXMtMjA3ODkxNzEwOS5qcGcmdz0zODQw?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-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84NzgyODAvZ2V0dHlpbWFnZXMtMjA3ODkxNzEwOS5qcGcmdz0zODQw"/>
<p>Image source: Getty Images.</p>
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<h2>Why did Meta's strategic shift crush CoreWeave's stock?</h2>
<p><span>Meta's strategic shift surprised CoreWeave's investors, since Meta had just agreed to pay CoreWeave $21 billion through 2032 </span><span>for</span><span> its neocloud services this April. Meta also struck a similar multi-billion dollar deal with another neocloud company, </span><strong>Nebius</strong><span> <span class="ticker-mention inline-flex items-center font-bold">(NBIS <span class="ml-1 text-green-900">+1.50%</span>)</span>. </span></p>
<p><span>Therefore, it might initially seem odd for Meta to sell its own cloud computing power when it clearly needs it. Meta's agreements with CoreWeave and Nebius also prohibit it from reselling any of that cloud computing power, so it can only sell the excess AI cloud capacity at its own first-party data centers.</span></p><div><div id="foolcom_sidebar_top_mobile_container"><div><div><div></div><div></div><div></div></div></div><div></div></div></div>
<section><div><div><div><small><div>Expand</div></small></div><div><img alt="CoreWeave Stock Quote" width="64" height="64" src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL0NSV1YucG5nJnc9MTI4?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-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL0NSV1YucG5nJnc9MTI4"/></div><div><h2>NASDAQ: CRWV</h2><div>CoreWeave</div></div></div><div><div><div>Today's Change</div><div>(-0.87%) $-0.78</div><div>Current Price</div><div>$88.92</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">$48B<span class="group/market-cap relative inline-flex shrink-0 align-middle"><span></span><span id="_R_13ad5tminr5uamivb_" 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>$88.01 - $91.28</div><div>52wk Range</div><div>$63.80 - $153.20</div><div>Volume</div><div>344K</div><div>Avg Vol</div><div>30.1M</div><div>Gross Margin</div><div>34.82%</div></div></div></div></section>
<p><span>However, Meta plans to invest up to $145 billion this year in expanding its own AI infrastructure. As it builds more data centers, some of those servers will remain idle until they're fully utilized by its social networking platforms and AI services. </span></p><div></div>
<p><span>To avoid wasting too much cash and energy on underutilized servers, Meta wants to rent them out to third parties -- a move that could transform it into a formidable competitor to companies like CoreWeave and Nebius. </span><span>CoreWeave's other </span><span><span>major customers, such as Jane Street and <strong>IBM</strong> (NYSE: IBM), could also eventually follow the same playbook if they decide to expand their </span>cloud infrastructure. </span></p><div><div id="in_line_article_pitch_container"><div><div><div><div></div></div><div><div></div><div></div><div></div></div></div></div><div></div></div></div>
<p><span>On the bright side, CoreWeave's largest customer -- </span><strong>Microsoft</strong><span> <span class="ticker-mention inline-flex items-center font-bold">(MSFT <span class="ml-1 text-green-900">+0.15%</span>)</span> -- probably won't do the same thing because it's already one of the world's biggest cloud infrastructure companies. Instead, CoreWeave will continue to serve as an &#34;overflow tank&#34; for its cloud services.</span></p>
<h2>Does the pullback represent a buying opportunity?</h2>
<p><span>From 2025 to 2028, analysts expect CoreWeave's revenue </span><span>to</span><span> surge from $5.1 billion to $40.3 billion as its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) soars from $3.1 billion to $25.7 billion. With an enterprise value of $91.2 billion, it still looks like a bargain at 7 times and 13 times this year's revenue and adjusted EBITDA, respectively.</span></p>
<p><span>Meta's move is alarming, but it doesn't break the bullish thesis for CoreWeave. Even if Meta sells its idle computing power to cut costs, it doesn't indicate that other companies will eagerly tether themselves to the social media giant's infrastructure. Instead, independent neocloud players like CoreWeave and Nebius should remain appealing choices as the AI market expands -- so this pullback could be a great buying opportunity. </span></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>

CRWV

METU

<p>CoreWeave stock dropped 11% after Meta announced plans to sell excess AI cloud capacity through a new unit, 'Meta Compute.' This move introduces direct competition for CoreWeave, despite Meta's existing $21 billion contract with the neocloud provider. Analysts view the pullback as a potential buying opportunity, citing strong revenue and EBITDA growth projections through 2028 and CoreWeave's continued role as an overflow provider for major clients like Microsoft.</p>

- Meta Platforms is establishing a unit named "Meta Compute" to sell its excess AI cloud capacity to external clients, which has impacted CoreWeave's stock negatively.  
- The shift is surprising, given Meta's previous agreements with CoreWeave for neocloud services, and aims to avoid wastage on underutilized servers as it invests $145 billion in AI infrastructure.  
- Despite the decline, analysts predict substantial revenue growth for CoreWeave, suggesting that this stock pullback may represent a potential buying opportunity.

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CoreWeave Stock Sank 11% After Mark Zuckerberg's Meta Unveiled a Cloud Business Plan