Emergency update!
Meta just released huge news that is shaking the markets.
Meta announced it plans to rent out "excess computing power" and compete with neo-cloud companies.
The result?
Meta stock $META is up about 7%
And on the other hand,
$NBIS stock is down about 10%
$CRWV stock is down about 10%
$NVDA stock is down about 2%
$INTC stock is down about 4%
What is stirring the markets with this news?
Two points:
The market essentially received two pieces of bad news at once.
1. The market is making a very simple calculation:
If Meta acquired billions in computing power, and now it is selling "excess computing power" - something here is starting to rot.
Meaning, the computing power Meta poured billions into suddenly became "excess"?
Is computing power no longer so needed?
Has the use of computing become unprofitable for a company like Meta?
Are chip companies, which have risen hundreds of percent since the start of the year, expected to see a drop in demand?
The second problem:
2. Meta instantly transitioned from a customer to a seller.
Which means, the supply of computing power instantly increased severalfold!
How will this affect the bargaining power of companies like Nebius and CoreWeave?
And does all this mean that demand for chips is expected to fall?
The market is now entering a defensive stance because everything it believed in is starting to collapse.
Meta is essentially telling the market - I don't need these chips, and therefore I am going to sell them to anyone willing to buy.