5 Takes On The Neocloud vs Hyperscaler Opportunities

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5 Takes On The Neocloud vs Hyperscaler Opportunities

Idea

July 1, 2026 09:45 PM GMT

Morgan Stanley & Co. LLCMMeta Platforms Inc | North America Brian Nowak, CFA

Equity Analyst

5 Takes On The Neocloud vs Brian.Nowak@morganstanley.comGregory Gao +1 212 761-3365

Research Associate

Greg.Gao@morganstanley.com +1 212 296-3125

Hyperscaler Opportunities Nikhil Javeri

Nikhil.Javeri1@morganstanley.com +1 212 761-3742

We remain bullish the neocloud optionality, temporarily Julian Herrera

monetizing excess capacity in a compute constrained world, and Research Associate

Julian.Herrera@morganstanley.com +1 212 761-1784

paint multiple paths to $3+ (8%+) of EPS. But building a broader Kavya A Narayanan

software offering would be challenging, requiring models/ ResearchKavya.Narayanan@morganstanley.comAssociate +1 212 761-4183

software, personnel, go to market, and likely more capex.

Meta Platforms Inc (META.O, META US)

What Happened? This morning, Bloomberg reported Meta is developing plans for a Top Pick

cloud business, setting up a potential new competitor with AWS, Azure, and Google Internet | United States of America

Cloud. The plans reportedly include two potential offerings: 1) hosted API/model- Stock Rating Overweight

Industry View Attractive

access service similar to AWS Bedrock (which would serve models including Muse Price target $775.00

Spark to developers) and 2) a neocloud-like raw silicon offering. The effort would sit Shr price, close (Jun 30, 2026) $563.29

Mkt cap, curr (mm) $1,761,347

within Meta Compute, the business division they set up in January to manage the 52-Week Range $796.25-520.26

company's compute procurement. Note Meta has not commented on this morning's

headlines.

1. Neocloud Option Much Easier than Fuller Service Hyperscaler: In our view, the