By Adam Clark

Meta Platforms was surging in premarket trading Wednesday on a report it plans to build a cloud business to sell excess artificial-intelligence computing capacity.

Meta hopes to generate revenue by selling excess computing power to third parties, Bloomberg reported, citing people familiar with the matter. That could take the form of access to AI models hosted on Meta infrastructure or access to general computing capacity.

Meta declined to comment on the Bloomberg report.

Shares of Meta rose 7.7% in premarket trading.

It's bad news for so-called neoclouds that are also in the business of selling AI computing power. CoreWeave fell 10% and Nebius dropped 12% in the premarket session.

Such a move would also bring Meta into direct competition with the three major cloud companies — Amazon.com, Microsoft, and Alphabet's Google. All three Big Tech stocks dipped briefly on the report in the premarket, before recovering to move higher.

If Meta does such launch a cloud business, it will raise questions about why it has excess AI capacity. Meta has previously said the technology is contributing to boosting its social-media business and it recently unveiled plans to sell consumer subscriptions to its Meta AI chatbot in order to offset the billions it is spending.

However, there is a clear business logic. Meta has previously had to justify its AI spending purely by its own operations, while its rivals could point to their cloud-computing businesses. And while healthy advertising spending boosted its most recent earnings, there are concerns about its apparent inability to launch a cutting-edge AI to take on ChatGPT, Gemini, and Claude.

Meta CEO Zuckerberg previously said that entering the cloud-computing market was definitely "on the table" when asked at a shareholder meeting in May. Now it looks to be a step closer to becoming a reality.

Write to Adam Clark at adam.clark@barrons.com

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