Meta Shares Surge Nearly 6% Today on AI Cloud Push and New Analyst Reports of Sharply Cheaper Compute Costs

Shares of Meta Platforms jumped Friday, trading at $667.81, up $36.33, or 5.75 percent, extending a hot stretch for the stock as investors continued reacting to signs that the company's massive artificial intelligence infrastructure spending may be significantly more cost-efficient than previously estimated.

Note: This article is intended to provide factual context and does not constitute financial advice. Readers should consult a licensed financial advisor before making investment decisions.

Friday's gains build on a rally that has pushed Meta shares up roughly 15 percent over the past week. According to Bank of America analyst Justin Post, an internal Meta memo reviewed by Reuters suggests the company could expand computing capacity considerably more efficiently than Wall Street had modeled. Post reiterated a Buy rating on the stock with an $835 price target, noting that Meta's projected capital spending of roughly $145 billion implies construction costs near $22 billion per gigawatt, well below Bank of America's earlier estimate of approximately $45 billion per gigawatt. If accurate, Post said, the figures could meaningfully ease investor concerns about the scale of Meta's AI investment program. Meta expects to deploy approximately 6.5 gigawatts of AI compute capacity during 2026, including 5.5 gigawatts in the second half of the year.

The renewed enthusiasm follows a broader strategic shift Meta has signaled in recent weeks. Chief Executive Mark Zuckerberg confirmed at the company's annual shareholder meeting that launching a dedicated AI cloud business is "definitely on the table," a move that would allow Meta to rent out excess computing capacity to outside developers rather than using it exclusively for its own products. According to reporting cited by the Motley Fool, the initiative, internally referred to as Meta Compute, would position the company to offer both hosted AI models, similar to Amazon Web Services' Bedrock, and raw compute rental, similar to specialized providers like CoreWeave. Analysts have said the shift would help transform what had been viewed as a purely defensive cost center into a potential new revenue stream, positioning Meta as a fourth major U.S. hyperscaler alongside Amazon, Microsoft and Google.

Meta has continued backing that strategic pivot with tangible product announcements. On July 9, the company unveiled Muse Spark 1.1, described as its most advanced AI model to date, targeting the fast-growing agentic and coding software market in direct competition with offerings from Anthropic and OpenAI. According to Investing.com, that launch represented the clearest near-term signal yet that Meta is translating its enormous AI spending into tangible commercial products, helping the stock recover from levels well below its 52-week high of $796.25. Meta is also incorporating its Muse Image model into its Advantage+ advertising platform, adding visual reasoning and self-refinement capabilities aimed at improving automated ad creative for marketers.

On the hardware side, Meta plans to begin manufacturing its custom AI chip, code-named Iris, with partners Broadcom and Taiwan Semiconductor Manufacturing later this year. Bank of America has said the chip initiative is unlikely to explain the near-term cost improvements reflected in the internal memo, but could strengthen Meta's long-term AI strategy as part of a broader custom silicon roadmap extending into 2027 and beyond. Meta has also continued expanding its physical data center footprint, recently breaking ground on its first Canadian facility, a roughly 13 billion Canadian dollar AI-focused campus in Sturgeon County, Alberta, expected to generate approximately 3,000 construction jobs and more than 300 permanent positions once operational.

Financial markets have responded favorably to the broader shift. According to 247 Wall St., prediction market platform Polymarket was pricing a 98 percent probability of an up day for Meta shares on July 10, with an 82 percent probability the stock would reach $680 by the end of the month. The stock currently trades at a forward price-to-earnings ratio of roughly 20 times, and investors are now closely watching Meta's second-quarter earnings report, scheduled for July 29, where management has guided for revenue between $58 billion and $61 billion. Analysts will be watching that call closely for any formal confirmation of an AI compute rental business, along with further detail on the company's broader monetization strategy.

Meta's first-quarter 2026 results, reported earlier this year, showed the strength underpinning the current rally. The company posted $56.31 billion in sales, up 33 percent year over year, with GAAP net income of approximately $26.77 billion and earnings per share of $10.44, far exceeding analyst expectations of roughly $6.67. Profit margins stood at 41 percent, and the company's core Facebook and Instagram advertising business generated roughly $55 billion of that total revenue. According to FX Leaders, Meta is projected to surpass Google this year to become the world's largest digital advertising company, with eMarketer forecasting Meta's 2026 ad revenue at approximately $243.46 billion, compared with $239.54 billion for Google.

Not every recent development has been favorable for the stock. According to CNN, the European Union recently found that the design of Instagram and Facebook violates the bloc's Digital Services Act over allegedly "addictive" design features, a finding that could expose Meta to fines potentially reaching into the billions of dollars. Meta has pushed back forcefully against related litigation, describing certain proposed legal damages tied to separate cases as "unprecedented" and totaling as much as $1.4 trillion, according to CNN's reporting. Citizens Bank also lowered its price target on Meta shares to $800 from $825 this week, even as the firm maintained a generally constructive view of the stock. Analysts at 24/7 Wall St. have noted that the combination of a genuinely improved capital expenditure story and a real regulatory overhang means investors should weigh both realities carefully, describing the bull case for Meta as "cheaper to underwrite" following recent developments, even as the bear case tied to European regulatory risk has grown "more expensive to ignore."

Investment firm ARK Invest, led by Cathie Wood, purchased 34,000 additional shares of Meta on Thursday, according to CNN, extending a pattern of active portfolio adjustments the firm has made involving major AI infrastructure stocks in recent months.

With Meta's AI cloud ambitions still in relatively early stages and formal details of any compute rental offering yet to be confirmed on an earnings call, investors are likely to continue closely monitoring both the company's July 29 second-quarter results and any further regulatory developments out of the European Union as key factors shaping the stock's trajectory through the remainder of the summer.