Meta jumps 6% to $670 as AI cloud push challenges Amazon, CoreWeave

Meta Platforms Inc. jumped 6% to $670 in Friday morning trading, extending a rally fueled by investor optimism that its massive artificial intelligence infrastructure buildout can transform the company into a serious competitor in cloud computing against Amazon Web Services and CoreWeave.

"The market is pricing in a scenario where Meta's AI capital expenditure becomes a revenue-generating asset rather than a cost center," Rachel Kim, an analyst covering AI infrastructure, said. "If Meta can monetize its compute capacity externally, it opens a total addressable market beyond advertising that investors have not yet modeled."

The stock closed Thursday at $631.48 before opening sharply higher Friday, pushing Meta's market capitalization above $1.7 trillion. The move follows a Reuters report that Meta plans to begin manufacturing its own AI chips in September, a step that could reduce its dependence on Nvidia Corp. and lower the cost of building out cloud capacity. Meta's operating cash flow, which equals 176% of net income, gives the company ample firepower to fund the expansion.

Meta has raised its 2026 capital expenditure forecast to a range of $125 billion to $145 billion and disclosed $107 billion in new contractual commitments for infrastructure. The spending is intended to support what Chief Executive Officer Mark Zuckerberg has called a "leading lab in the world" for AI, with products ranging from image-generation tools like the newly launched Muse Image to enterprise cloud services. The company's 3-year average revenue growth of 22% and a 6% AI-driven improvement in ad conversion rates provide evidence that the investments are already generating returns in its core business.

The Cloud Computing Calculus

Meta's push into cloud services would put it in direct competition with Amazon, whose AWS unit generated $107 billion in revenue in 2025, and CoreWeave, the AI-focused cloud provider that has raised billions to build GPU clusters for startups and enterprises. Both incumbents have years of head start in infrastructure, customer relationships, and enterprise sales expertise.

But Meta brings advantages that pure cloud providers lack. Its existing global network of data centers spans more than 20 locations, and its in-house chip development — the planned September manufacturing start follows years of work on custom silicon for AI inference — could give it a cost structure that rivals cannot match. Meta's stock trades at 11.6 times operating cash flow, a discount to its five-year average of 13.7 times, suggesting the market has not yet priced in a successful cloud pivot.

What's at Stake for Investors

The bet is not without risk. Meta's management has acknowledged it "continued to underestimate our compute needs" and lacks a "very precise plan for exactly how each product is going to scale," according to the company's most recent earnings call. If the cloud initiative fails to gain traction, the $125 billion-plus in capital spending could pressure margins for years.

For Amazon and CoreWeave, Meta's entry adds capacity to an already crowded market at a time when AI training demand is growing but inference pricing is compressing. The Nasdaq Composite rose 1.3% on Friday, with the PHLX chip index gaining 3.1%, as broader tech sentiment remained bullish. Meta's ability to convert its infrastructure spending into a new revenue stream will determine whether the stock's current valuation — offering an earnings yield of 4.6%, equal to the 10-year Treasury — represents a historic bargain or a value trap.

This article is for informational purposes only and does not constitute investment advice.