On July 2, UBS stated that if Meta sells AI computing power or model access services to external clients, it should not be interpreted by the market as a negative signal of 'overcapacity in AI infrastructure.' Instead, this could become a pathway for Meta to more rapidly convert its substantial AI investments into revenue. In a First Read report released on July 1, UBS mentioned that Meta is reportedly considering two commercialization methods: selling 'raw' computing power to external companies and providing access to AI models hosted on Meta's infrastructure. The report noted that Zuckerberg has previously mentioned similar options in public, so this is not entirely new information. However, this direction may still cause some investors to feel uneasy. The long-term growth opportunities that Meta has painted for the market primarily include advertising, more immersive content experiences, business messaging, Meta AI, and AI devices, rather than directly becoming a cloud computing or computing power supplier. Therefore, if the company does indeed sell computing power externally, the market may question whether this is a proactive monetization effort or a passive response to excessive AI capital expenditures. UBS's assessment is more pragmatic. The firm believes one of the core issues currently facing Meta is the lengthy investment cycle in AI, with unclear timelines for revenue realization. Compared to waiting for Meta AI chatbots or enterprise intelligent agents to gradually scale, selling cloud computing power or model access could potentially bring in nearer-term revenue, thereby alleviating investor concerns about flat or even declining EPS by 2027. The report maintains a Buy rating for Meta, with a 12-month target price of $865, while the listed stock price in the report is $601.85. UBS expects Meta's diluted GAAP EPS to be approximately $32.6 and $33.0 for 2026 and 2027, respectively, and stated that it will not adjust its earnings forecast until the company confirms related news. The target price is still based on a multiple of 26 times the expected diluted GAAP EPS for the full year ending in the first quarter of 2028. The implication of this report is that Meta's AI transactions are entering a new phase: the market is no longer just asking how much it will spend on GPUs and building data centers, but is beginning to demand to see how these investments will generate returns. For UBS, selling computing power is not a strategic retreat, but rather an additional cash flow outlet for the AI investment cycle.

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UBS: Meta's Sale of AI Computing Power May Alleviate Profit Pressure

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