While Meta investors cheered the development, leading to a 9% stock pop as of Wednesday afternoon, shares of CoreWeave and Nebius fell nearly 13.9% and 17%, respectively.

The social-media giant is taking a page from SpaceX, which recently pivoted to selling its excess capacity to customers like Anthropic and Alphabe. Meta CEO Mark Zuckerberg previously hinted at the possibility of this business move as a way of monetizing “overbuilt” capacity.

Representatives from Meta declined to comment.

More: SpaceX’s new $11 billion ‘saving grace’ comes with a big catch

Bernstein analyst Madison Rezaei initially flagged the possibility of such a risk to neoclouds in a March note, likening CoreWeave’s business model to a “situationship,” or a noncommittal romantic entanglement.

Rezaei argued that neoclouds like CoreWeave face the risk of major hyperscaler customers eventually becoming competitors as they build out their own data-center capacity. That would suggest that hyperscalers are using neoclouds more as a stopgap measure than a long-term solution.

CoreWeave and Nebius offer GPUs-as-a-service, providing customers with the highly specialized infrastructure necessary to run AI workloads. Beyond hardware, they also provide end-to-end AI development solutions. Their businesses have flourished in a compute-constrained environment with a seemingly insatiable demand for capacity.

Should Meta develop a cloud platform rivaling Amazon’s AWS, Microsoft’s Azure or Google Cloud Platform, “it’s problematic for CoreWeave,” Rezaei wrote in a Wednesday note.

Meta struck a $14.2 billion deal with CoreWeave last September, and the two parties expanded the agreement by an incremental $21 billion in April. In March, Meta also signed a contract with Nebius for AI infrastructure services of up to $27 billion.

But now, Meta’s move to sell its extra capacity suggests that the tech giant may no longer need to purchase significantly more computing power.

The combined $35.2 billion of contracts represents over a third of CoreWeave’s backlog, Rezaei pointed out.

With another $14 billion in contracts from Microsoft, “nearly half of [CoreWeave’s] backlog comes from customers who will be full competitors at the time of renewal,” Rezaei wrote.

Nebius did not immediately respond to requests for comment.

“We’re continuing to see incredibly strong demand across a growing and increasingly diverse customer base, including Meta who is a great customer and partner of CoreWeave’s. More investment across the AI ecosystem reinforces what we’re seeing every day: a rapidly expanding market, not a zero-sum game,” a CoreWeave spokesperson told MarketWatch.

Beyond offering compute, CoreWeave is focused on providing the software, security and operational expertise necessary to scale AI, the company said.

Now read: How CoreWeave’s ‘situationship’ with Big Tech could cause a 30% stock drop

Source: Marketwatch