GoKawiilWells Fargo cuts Meta cloud-resale forecast by $5B, citing Muse AI demand
Wells Fargo removed 500 megawatts of expected capacity resales from its 2027 estimates for Meta, roughly $5 billion in revenue, saying the company will likely need that computing power for its Muse AI agent instead. The firm raised its price target on Meta to $1,000 from $796, implying about 35% upside from Monday's close.
GoKawiil's interpretation of the reporting above, not reported fact.
The shift suggests Wall Street is moving away from valuing Meta on potential cloud-rental revenue and toward valuing it on AI products built with its own compute, according to Wells Fargo's note. Jim Cramer argued that using compute to build a large AI business is more valuable than renting it out, unlike SpaceX, which lacks Meta's existing profitable ad business to fund long-term AI bets. Growing competition from neocloud providers could also make simple capacity-renting less attractive over time, though that remains speculative.
- Wells Fargo cut $5B in projected 2027 cloud-resale revenue from Meta estimates
- Price target raised to $1,000, implying ~35% upside from Monday's close
- Analysts and Cramer favor Meta using compute for Muse AI over renting it out like SpaceX
Source: cnbc.com — Alexa Lomonaco, 2026-10-06
Published there as: “Meta may ditch the idea of a cloud business for Muse. We think that’s a good trade”
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