Shares of CoreWeave It was very affected after the news came out Meta Platforms is building a cloud business to sell spare AI computing power.
The tech stock fell sharply in two trading sessions last week, and is currently valued at $64.4 billion.
Notably, Meta (META) is one of CoreWeave’s (CRWV) biggest customers. The two companies, who were partners last month, are now competing in a fast-growing market.
Meta’s move upsets CoreWeave investors
According to CNBC, Meta will sell its unused computing power to other businesses, a plan first reported by Bloomberg.
As CNBC reports:
Meta is still deciding whether to provide full access to the AI models running on its own servers or simply lease raw computing power from other companies.
Meta has not publicly confirmed the plan. However, Meta CEO Mark Zuckerberg hinted at this possibility months ago.
He told investors during the company’s Q3 earnings call that a move to cloud services is “on the table.”
He repeated that message at Meta’s annual shareholder meeting in May, saying that if the company ends up with more AI infrastructure than it needs, “that’s an option we have.”
Meta plans to spend up to $145 billion this year to build data centers and buy the graphics processing units (GPUs) needed to train and run AI models.
Turning unused capacity into a new revenue stream could ease the pressure on that heavy spending, sending Meta stock higher following the news.
Related: Meta recently battled Amazon’s cash cow
Meta follows the path Elon Musk’s SpaceX has taken this year by selling more computing capacity.
SpaceX has deals with Anthropic, which pays $1.25 billion a month for capacity, and Google, which pays $920 million a month, per CNBC.
What it means for CoreWeave’s business model
According to Reuters, Meta is one of CoreWeave’s largest customers, with a total contract commitment of about $35 billion, including a $21 billion deal that runs through December 2032.
Meta may host AI models that developers are paid to use or sell GPU access directly. When it hosts AI models, the tech giant competes with software services. However, if Meta sells GPU access, it will compete with CoreWeave and peers like Nebius.
CoreWeave is part of the neocloud market, which is growing rapidly. A research report from Mordor Intelligence projects the market is poised to grow from $24 billion in 205 to $236.5 billion in 2031, representing a compound annual growth rate of more than 45%.
In Q1 2026, CoreWeave doubled its revenue, indicating that it is outpacing the broader industry’s growth and gaining market share.
Michael Intrator, CEO of CoreWeave said:
“Q1 was a transformational quarter for CoreWeave. We delivered our strongest quarter ever for customer bookings, signing more than $40 billion in new commitments and growing our contract backlog to nearly $100 billion.”
Analysts tracking CoreWeave forecast revenue to increase from $5.13 billion in 2025 to $82 billion in 2030, representing a CAGR of 74%.
Even with Meta entering the access GPU market, CoreWeave has ample room to continue growing over the next decade.
Mark Zuckerberg may open a new way to make money MetaTom Williams/Getty Images
CoreWeave executives have previously played down the threat
CoreWeave’s leadership addressed competitive concerns at investor conferences this year, before the Meta cloud news broke.
Speaking at the Bank of America Global Technology Conference in June, CoreWeave Chief Strategy Officer Nicholas Robbins said hyperscalers like Microsoft have told him they eventually plan to build all of their AI capabilities in-house.
He said the risk is “very limited,” noting that Microsoft accounted for 85% of CoreWeave’s back-end revenue from its IPO but is no longer even its biggest customer.
At JPMorgan’s Global Technology Conference in May, CoreWeave Chief Development Officer Brannin McBee talked about a similar deal involving Blackstone and Google to build TPU cloud capacity.
Additional Meta:
He called it “yet another signal of need” for AI infrastructure rather than a threat, adding that CoreWeave’s clients are specifically asking for Nvidia GPUs, not the chip architecture that other cloud providers are building around.
McBee also cautioned that subscriptions to energy and land do not automatically translate into revenue.
He said building and deploying GPU infrastructure at scale is “very difficult,” and that CoreWeave’s software platform, called Mission Control, is what allows it to deliver billable compute hours rather than promises.
Is CRWV stock undervalued?
CoreWeave still carries real financial risk. The company holds about $25 billion in long-term debt and leases less than $4.8 billion in equity, and continues to post net losses as it builds infrastructure.
The company is not yet profitable and is predicted to report free cash flow of more than $80 billion by 2030.
Valued at a price-to-market (2026) multiple of five times, CoreWeave is relatively inexpensive given its growth estimates.
Out of 24 analysts covering CoreWeave stock, 14 recommend “Buy”, nine recommend “Hold,” and one recommend “Sell”. The average price target for CoreWeave stock is $132, indicating a 62% upside from current levels.
Whether Meta becomes a true competitor or remains an occasional backup customer, the AI infrastructure race is far from settled.
For now, CoreWeave executives are betting that scale, technology, and their relationship with Nvidia will keep it ahead of the pack.
Related: The next Meta AI bet has a big catch for investors
This story was originally published by TheStreet on Jul 7, 2026, where it first appeared on Investing money part. Add TheStreet as a Preferred Source by clicking here.
