UBS: Meta's sale of AI computing power may not be bad news; it could actually alleviate profit pressure.

According to BlockBeats, on July 2nd, UBS believes that Meta selling AI computing power or model access services to external customers should not necessarily be interpreted by the market as a negative signal of "AI infrastructure overcapacity." On the contrary, this could be a path for Meta to more quickly convert its massive AI investments into revenue. In its First Read report released on July 1st, UBS mentioned that Meta is reportedly considering two commercialization methods: selling "raw" computing power to external companies and providing access to AI models hosted on Meta's infrastructure. The report states that Zuckerberg has previously mentioned similar options publicly, so this is not entirely new information. However, this direction may still make some investors uneasy. Meta has previously described long-term growth opportunities to the market primarily including advertising, more immersive content experiences, business messaging, Meta AI, and AI devices, rather than directly becoming a cloud computing or computing power provider. Therefore, if the company does sell computing power externally, the market may question: Is this proactive monetization, or a passive digestion of excessive AI capital expenditure? UBS's assessment is more pragmatic. The bank believes that one of Meta's core problems is the excessively long investment cycle in AI, coupled with an unclear revenue realization timeline. Compared to waiting for Meta's AI chatbot or enterprise intelligent agent business to gradually scale up, selling cloud computing power or model access could potentially generate more immediate revenue, thus alleviating investor concerns about flat or even declining EPS in 2027. The report maintains its Buy rating on Meta with a 12-month target price of $865, while the listed share price is $601.85. UBS projects Meta's diluted GAAP EPS for 2026 and 2027 to be approximately $32.60 and $33.00, respectively, and states that it will not adjust its earnings forecast until the company confirms the relevant information. Its target price remains based on a 26x multiplier of its full-year diluted GAAP EPS forecast ending in Q1 2028. The significance of this report is that Meta's AI deals are entering a new phase: the market is no longer just asking how much it will spend on GPUs and data centers, but is beginning to demand to see how these investments will generate returns. For UBS, selling computing power is not a strategic retreat, but rather an additional cash flow outlet for its AI investment cycle.