MetaPlatform on Wednesday gave investors what they needed to gain new confidence in the company’s growing artificial intelligence spending and its stock price. Jim Cramer confirmed Wednesday that Meta is preparing to launch a cloud infrastructure business to sell excess AI computing power and AI models to external customers, throwing the company into a competitive cloud market with hyperscaler giants like Amazon Web Services, Alphabet Inc.’s Google Cloud and Microsoft Inc.’s Azure. Bloomberg News first reported Mehta’s plans. Shares of the Facebook and Instagram parent company soared more than 9% on Wednesday to $617 a share, making it the biggest gainer in the S&P 500. This upbeat reaction is not surprising to us. Jim has recently stepped up his calls for Meta to launch a cloud business, and predicts the struggling stock will soar in response. I was like, “What the heck is Meta doing up until today?” Jim told CNBC on Wednesday. He added: “They’re going to use that (computing) power to deliver profitable enterprises to their customers.” Meta shares on Wednesday fell about 7% year-to-date, lagging the S&P 500 and the tech-heavy Nasdaq Composite Index, which have risen 9.55% and 12.4%, respectively. The company was also the second-worst performer among the Magnificent Seven, ahead of Microsoft, which has been caught up in the broader narrative that AI is eating enterprise software. Shares of the other two cloud giants, Amazon and Google, rose 5% and 14.6%, respectively. Meta is facing increasing questions about its plans to monetize massive capital investments in servers, data centers and network infrastructure. Meta has previously defended its AI computing investments, saying they are improving its advertising business for Facebook and Instagram. But that’s starting to significantly squeeze Meta’s free cash flow, to a level that makes some investors uncomfortable given its narrow and economically sensitive revenue stream. Meta’s capital expenditures totaled $37.2 billion in 2024, which rose to $69.6 billion last year. This is expected to nearly double this year to $135 billion at the midpoint of the guidance range. For comparison, Microsoft announced in April that it plans to spend about $190 billion in capital spending this calendar year. This is above Meta’s outlook, but the main difference is that Microsoft has a cloud business to serve. Similar safeguards apply to Google’s 2026 capex forecast of $180 billion to $190 billion and Amazon’s guidance of $200 billion. But building a cloud business provides a new avenue for Meta to profit from all of its AI spending, which should help alleviate some of the market’s concerns and improve attitudes toward the stock even before the proceeds start to arrive in the coffers, Jim explained on Wednesday. In other words, the meta is no longer a one-trick pony. Even better, this new venture in cloud computing is proving to be a highly profitable business for other companies. This is no surprise at all. In late May, Meta CEO Mark Zuckerberg said launching a cloud computing business was “definitely on the table.” Jim argued that Meta needs to start moving in that direction as stocks have remained depressed in recent weeks. In this Sunday’s column, he wrote: It’s increasing (computing) power, but for whom? I don’t understand. Perhaps just a proprietary advertising model? That’s terrible and that’s why its stock is going down. Zuckerberg’s consistent statement at this point is that “we’re not going to destroy our balance sheet by spending money on data centers,” or better yet, “we’re going to monetize power by building a web services system,” which would still make it an attractive investment as the stock gets out of its doldrums. To be sure, questions remain about Meta’s plans to sell access to computing power. For Meta to successfully compete in cloud computing, it will need more than just owning an AI data center, according to technology analysts interviewed by Investing Club ahead of the Bloomberg report Wednesday morning. Tech industry analyst Ben Bajarin said investors need to distinguish between two very different types of computing businesses. One is renting AI infrastructure, which he called “bare metal” computing. In this case, customers would bring their own software and run it on Meta’s hardware. The other is to build a full-service cloud platform with software, developer tools, and enterprise services such as AWS, Microsoft Azure, and Google Cloud. “The question is, are they providing the infrastructure to a third party or are they trying to layer software on top of it,” said Bajarin, CEO and principal analyst at Creative Strategies, a Silicon Valley-based research firm focused on the technology industry. He is also co-host of The Circuit, a podcast covering the semiconductor and AI computing industries. The Bloomberg report suggests that Meta is evaluating both approaches. One proposal is similar to AWS Bedrock, giving developers access to AI models hosted on Meta’s infrastructure, and the other is selling raw computing power, similar to neo-cloud providers like CoreWeave and, more recently, SpaceX. Last month, Elon Musk’s rocket and AI company struck a deal with Google to pay it $920 million a month for additional computing power. SpaceX, which built a massive data center near Memphis, Tennessee, has a similar deal with Anthropic. Bajarin said when Meta’s cloud business comes to fruition will depend on how ambitious the company’s cloud plans are. If the company rents surplus AI infrastructure, products could arrive faster because customers would provide their own software. On the other hand, building a full-fledged cloud platform like AWS or Google Cloud takes much longer. That’s because building a cloud business to serve external customers is more difficult than building a data center for internal workloads, he said. Bajarin said it needs software that allows customers to deploy workloads on its infrastructure, an area where incumbent cloud providers have spent years investing. Paul Meeks, head of technology research at Freedom Capital Markets, said Meta’s investment-grade balance sheet gives it a significant advantage over emerging AI infrastructure providers that have relied heavily on debt to fund expansion. But Meeks wondered whether an AI company would want to host sensitive workloads on infrastructure owned by competitors who are building their own AI models and applications. He outlined how AI labs like OpenAI and Anthropic are thinking about this issue. “If Meta has a product that competes with us, people will be hesitant to buy their cloud services,” said Meeks, who has covered technology for decades. At the same time, Bajarin argued that the demand for AI computing remains so strong that customers will “use computing wherever they can get it,” but that it will work if Meta takes a bare metal approach. And if you’re after a full-fledged cloud service, Meta has relationships with many companies that use Instagram, Facebook, and WhatsApp. This makes Meta a potential cloud customer. Conclusion We are pleased that Meta is exploring ways to commercialize its AI infrastructure and taking steps to demonstrate to Wall Street that it is sensitive to investor concerns. At the same time, larger questions remain about how ambitious the company intends to be: whether it wants to be just a supplier in a compute-hungry market or build a full-service cloud platform. Either way, the move is another welcome step in Meta’s efforts to turn large AI investments into meaningful long-term returns for investors. (Jim Cramer’s charitable trusts are long META, AMZN, GOOGL. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. 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