Jim Cramer Highlights Meta Entering the Neocloud Business

Meta Platforms, Inc. (NASDAQ:META) was among Jim Cramer’s stock calls on Mad Money, as he highlighted the AI opportunities in neoclouds. Cramer highlighted the company’s entry into the neocloud space, as he remarked:

Last week, we learned that Meta Platforms might pivot some of its AI business and join the ranks of the neoclouds. These are companies that basically sell computing power externally, not just use it for themselves. Now, that is great news for shareholders because Meta needs to monetize more of that investment. Now, Meta is similar to the major cloud infrastructure plays like Amazon Web Services, Google Cloud, and Microsoft Azure…

All of these neocloud stocks got crushed last week when they heard that Meta wants to get in on the action. Meta’s been one of the industry’s biggest clients; now, it wants to become a competitor. The bears ran wild in response, arguing that we’ve built too many of these data centers, and it’s the dot-com collapse all over again. How many times have you heard that?

But I think Meta is just doing the smart thing. They’ve spent fortunes building out data center capacity, so they might as well rent out at least some of that compute to generate a return on investment in the process. The fact that they can rent out compute at a huge premium tells you that there’s a shortage of data center capacity- not too much, a shortage. Others agree. The stock is now up about $50 since the announcement.

Photo by Alexander Shatov on Unsplash

Meta Platforms, Inc. (NASDAQ:META) develops technologies and applications that connect people through social networking and messaging. The company’s portfolio includes Facebook, Instagram, WhatsApp, Messenger, Threads, and virtual and augmented reality products.

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