Meta Is Finally Entering This High-Margin $500 Billion Market. Is the Stock a No-Brainer Buy?
Meta is planning to start a cloud computing business. It could be a game changer.
Overview
It's rare for a stock the size of Meta Platforms (NASDAQ: META) to jump 9% on non-earnings news, but that's exactly what happened on Wednesday, and for good reason.
Bloomberg reported that the social media giant is launching its own cloud computing business. Though Meta hasn't made its own announcement about a new cloud infrastructure service, the news comes weeks after CEO Mark Zuckerberg said that a cloud business was "definitely on the table."
Details
The move added about $150 billion to Meta's market cap as investors are hopeful it could unlock a second profitable revenue stream for the company, complementing its advertising juggernaut, and leverage infrastructure it already owns. Cloud computing has become a huge cash cow for Meta's big tech peers like Amazon, Microsoft, and Alphabet, and all three are reporting accelerating growth in the cloud, showing demand for compute infrastructure skyrocketing in the AI era. Meta is also considered the fourth hyperscaler, though it's the only one without a cloud business. Zuckerberg has said that his company receives interest in cloud services every week, and that companies are willing to pay a premium, suggesting it should be able to hit the ground running when it launches.
Source
Originally published at www.fool.com.