[Into the World of AI] Oversupply of AI Infrastructure?... Meta-Induced Shock Shakes the Stock Market

Meta Considers Entry into 'Neo Cloud' Business
Global AI Semiconductor Stocks Plunge in Unison
"Tangible Results from AI Investments Expected Within 3 to 6 Months"

This week, news broke that Meta is considering a 'Neo Cloud' business that would rent and sell surplus computing resources from its artificial intelligence (AI) infrastructure for a fee. This triggered a plunge in global semiconductor stocks. With Meta under pressure to deliver results after aggressively ramping up AI infrastructure investment, the blueprint it presents at its second-quarter earnings announcement on the 29th (local time) is expected to become a watershed moment for AI investment sentiment.

According to Bloomberg News on July 1, multiple sources revealed that Meta has internally established a 'Meta Compute' plan and is devising a cloud business model that utilizes its data center infrastructure. If true, this signals a direct confrontation with Amazon Web Services (AWS), Microsoft (MS) Azure, and Google Cloud, which currently dominate the global cloud market.

Although there was no official announcement, Meta's stock price soared by about 9% on expectations. In contrast, shares related to AI semiconductors, which had been overheated despite the so-called "AI bubble theory," tumbled. The concern is that if Meta releases its surplus resources to the market, demand for new semiconductor purchases by other companies could decrease. Immediately after the news broke, Micron shares plummeted by more than 10% on the New York Stock Exchange, while SanDisk (-10.6%), Intel (-9.03%), and AMD (-6.89%) also suffered sharp declines. CoreWeave, whose main business is GPU rentals, plunged more than 10%. The shock also rattled the Korean stock market, with SK hynix and Samsung Electronics each falling by 9.06% and 14.57% on July 2.

However, given the lack of concrete plans and concerns that capital expenditures (CAPEX) could exceed the existing guideline of up to $145 billion for this year, Meta gave back more than half of its previous gains the following day. In fact, CEO Mark Zuckerberg acknowledged limitations in the pace of AI development during an internal town hall meeting. He said, "Over the past four months, the pace of AI agent development has not met management's expectations," but added, "However, within three to six months, we will see tangible results from our AI investments."

Meta Holds the Most Nvidia GPUs, But Profitability Remains a Challenge

Meta is one of the companies with the largest number of Nvidia GPUs in the world, based on a single company. However, since its main source of revenue is advertising, AI infrastructure investments have not directly translated into increased sales, a point that has drawn criticism. This stands in contrast to Google, Microsoft, and AWS, which sell their AI infrastructure to enterprises through cloud services, generating immediate revenue.

Therefore, some in the market are optimistic that if Meta fully enters the cloud infrastructure business, it will recover its investment costs and, in the long term, drive even greater demand for AI semiconductors. Kang Jae-Ku, a researcher at Hana Securities, said, "Meta's entry into a new business is an attempt to seek new business opportunities in the growing AI industry while easing financial burdens," adding, "On the contrary, it may stimulate AI demand and lead to upward revisions in capital expenditure forecasts for platform companies."

Meanwhile, Meta's remarks about AI infrastructure investment have repeatedly triggered sharp drops in its stock price. In a conference call in April 2024, Zuckerberg declared an expansion of AI investment, saying, "It will take time to become profitable." As a result, Meta's stock price plunged by 15%, wiping out $190 billion in market capitalization in a single day.

In October last year, Meta announced that it would spend up to $72 billion in capital expenditures, double the amount spent the previous year. When Zuckerberg further stated, "Spending will increase even more in 2026," the stock price dropped another 11% in a single day. This was interpreted as a lingering trauma from 2022, when Meta's heavy spending on the metaverse sent its stock price tumbling.

This content was produced with the assistance of AI translation services.