Should Nebius and CoreWeave Investors Be Scared by Meta's Latest Plans?

Neocloud companies CoreWeave (NASDAQ: CRWV) and Nebius (NASDAQ: NBIS) each have major deals with Meta Platforms (NASDAQ: META). While the social media giant is still building out its own data center footprint, it has also secured leases with CoreWeave and Nebius to gain access to additional computing power in the meantime. It's doing this to give itself the best shot at developing an artificial intelligence model that can rival those produced by the other AI hyperscalers.

However, recent news suggests that Meta's approach could be changing, and that possibility ignited a sell-off in Nebius and CoreWeave's stocks. CoreWeave is now down by 35% from its 2026 high, and Nebius is down by nearly 25%. So, what caused these stocks to crater? Word that Meta plans to launch its own cloud computing service.

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The worrisome reason Meta is launching a cloud platform

Of the big four AI hyperscalers, Meta Platforms is the only one without a cloud computing platform. The basics of the cloud business are straightforward: Owners build out excess computing capacity and then rent that computing power to various clients. That business model has become even more vital during the AI boom. Few companies have the resources necessary to build AI data centers, as they're incredibly expensive.

The market has been fairly patient with the big three cloud computing providers' build-out plans because investors can see how those investments will directly translate into revenue growth. However, Meta has been using all of its computing capacity on internal efforts that don't produce returns on investment that are as easily measurable. Because of this, the market has always been more skeptical about Meta's enormous capex budgets.

Creating a cloud computing business has never been a top priority for CEO Mark Zuckerberg, and he stated that the company would consider forming one only if it had excess computing capacity that it wasn't using for internal needs. As of early June, he claimed Meta did not have that spare capacity. However, recent reports allege that Meta is taking steps to form a cloud computing business, which could transform how the market views the stock.

But it also raises questions about the future of Nebius and CoreWeave.

Does Meta need the neoclouds' computing capacity anymore?

Earlier this year, Nebius announced a five-year partnership under which it will provide $12 billion in dedicated capacity to Meta Platforms. The deal also included the possibility of it leasing another $15 billion in computing capacity from clusters that Nebius has not yet brought online. That's a huge deal for a company of Nebius' size, and it was a big reason why the stock has rallied this year. CoreWeave signed a similar $14 billion deal with Meta last year.

The reason Meta inked those deals was to gain access to as much computing capacity as possible, as quickly as possible. If it concludes that it actually has too much computing capacity, but decides that it doesn't want to build a cloud computing business, then Meta could cut ties with these two neoclouds and potentially regain the resources it needs for its AI demands. However, I doubt that will happen.

The reality is that AI computing capacity is supply-constrained right now, and having the right to more of it is a bigger advantage. Plus, if Meta's personal superintelligence AI model eventually becomes a hit and is tied into its AI glasses, the company could need a lot of the AI computing power it has already contracted for. Just because Meta has more computing capacity than it needs right now doesn't mean it won't need all of it in the future.

Because of that, I think CoreWeave and Nebius are still OK investments; they're just a little less safe than they were a few months ago. These two are booming cloud businesses, and even if Meta backs out of its deals with them, they will likely be able to find customers who do want that computing capacity.

Keithen Drury has positions in Meta Platforms and Nebius Group. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.