JPM TECH SKETCH: META Cloud is the Fallback Plan, AMZN Leo Close to Commercialization, DT Rule of 50

Research evidence excerpt

JPM TECH SKETCH: META Cloud is the Fallback Plan, AMZN Leo Close to Commercialization, DT Rule of 50

ear-term monetization

(something that may help them if they need more capital down the road).”

From Doug’s META Thoughts on Potential Cloud Monetization Strategy: “While there is a wide range of monetization across the

industry, we believe 1 GW of capacity could generate ~$20B of annual revenue, and several dollars of EPS. This would be

highly additive to Meta’s current AI product efforts focused on business agents, subscriptions, & Meta Glasses. Monetizing

infrastructure provides Meta greater flexibility & enables the company to recoup some of its massive investment, similar to what

we’ve recently seen among other large infra players. However, we’d much prefer that Meta develop core AI products, leverage

them over its base of ~4B users, & require massive compute for its own inference rather than selling access to its infrastructure.

What this means for forward capex is unclear. We expect Meta to remain committed to developing a frontier model and launching

improved versions beyond Muse Spark, while also pursuing a range of AI-driven products across the Family of Apps — all of

which would suggest continued heavy spending. We currently project Meta 2027 capex of $202B.”

From Bloomberg: “Meta Platforms Inc. is developing plans for a cloud infrastructure business that will sell access to AI

computing power and models, setting up a new vector of competition with industry leaders like Amazon Web Services, Microsoft

Azure and Google Cloud. Meta, which has been rushing to secure expensive data centers and other infrastructure to fuel its own

artificial intelligence ambitions, is forming a business to generate revenue from excess computing power sold to outside