Wall Street Lunch: Meta's AI Cloud Bet Lifts Shares, Hits Neocloud Rivals

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Meta explores selling excess AI compute. (0:15) Nike beats, but China weak. (1:02) Private jobs gains fall short. (1:54)

This is an abridged transcript of the podcast:

Our top story so far, Meta Platforms (META) is gaining after Bloomberg reported the company is building a cloud business around its excess artificial intelligence computing capacity.

The company is creating a business unit to generate revenue from that excess compute, the report said.

One proposal would allow customers to access AI models hosted on Meta’s infrastructure, similar to Amazon Web Services’ Bedrock.

Meta has also discussed selling raw computing capacity, putting it in more direct competition with CoreWeave (CRWV) and other neocloud providers.

CoreWeave and peers including Nebius (NBIS), IREN (IREN) and Applied Digital (APLD) fell on the news.

UBS analyst Stephen Ju said monetizing excess compute could reduce earnings risk.

Selling cloud capacity or AI model access “will theoretically yield higher near-term revenue versus waiting for Meta Business Agents and Meta AI chatbots to scale,” Ju said.

Among active stocks, Nike (NKE) is higher after delivering better-than-expected profit and sales in Q4.

But the company also showed continued weakness in China, one of its largest markets, and “the trajectory of the turnaround remains unclear,” Needham analyst Tom Nikic said.

General Mills (GIS) is rallying after topping revenue, organic sales and profit estimates in Q4.

Looking ahead, the company still sees organic net sales in a range of -1.5% to +0.5%, with its EPS midpoint of $3.10 a touch below consensus.

And Kroger (KR) announced that it acquired Giant Eagle, one of the largest privately held grocery chains in the U.S., for $1.25B in cash and the assumption of $400M in debt.

Giant Eagle generates about $9B in annual sales across 197 supermarkets and 11 standalone pharmacies in northern Ohio, western Pennsylvania, West Virginia, Maryland and Indiana.

Ahead of Thursday’s jobs report, ADP said the U.S. private sector added 98K jobs in June, missing the 117K consensus and slowing from the 122K jobs added in May.

Strategist Neil Sethi said that while hiring cooled, the three-month average is still the strongest since January 2025, led once again by health care and small-business hiring.

In other news of note, you’ve got gains!

Bending Spoons (BSP), now the parent company of what remains of AOL, is rallying after pricing its IPO at $29 a share.

The stock topped $40 in afternoon trading.

Founded in 2013, Bending Spoons follows a digital brand roll-up strategy, acquiring underperforming but well-known software and app businesses and seeking to revive them using AI and data science.

Along with AOL, the company owns Vimeo, WeTransfer, Evernote and Eventbrite.

And in the Wall Street Research Corner, William Blair updated its analyst Conviction List, adding 14 new names its analysts see as their best ideas for strong near-term performance.

Oracle (ORCL) was among the additions. Analysts said the company is a major beneficiary of the AI infrastructure buildout, with hyperscale cloud commitments driving record remaining performance obligations and improving revenue visibility.

Most of the deletions, including Meta (META) and meme favorite Chewy (CHWY), were automatic removals after reaching the list’s six-month limit.

Check out all the additions and removals in our story.