Meta Platforms (META) stock surged approximately 15% this week after a series of AI-focused announcements gave investors a clearer picture of how the company intends to monetize its heavy infrastructure spending, with Morgan Stanley simultaneously highlighting Alphabet and Amazon as top picks in a broader AI rotation away from chipmakers.
The rally pushed Meta back into positive territory year-to-date, closing Friday at $669.21. The immediate catalysts included confirmation of a custom AI chip launch in September (built with Broadcom and TSMC), a plan to double computing capacity to 14 gigawatts by 2027, and CEO Mark Zuckerberg’s revelation that Meta is exploring renting AI computing power to third parties — potentially a new revenue stream outside advertising.
On the model front, Meta’s Superintelligence Labs unveiled Muse Spark 1.1, an agentic model optimized for coding, with a stark pricing advantage: $1.25 per million input tokens versus $5 from Anthropic’s comparable offering. The aggressive undercut positions Meta as a low-cost provider in the developer ecosystem.
Morgan Stanley’s separate research added weight to the theme of traders rotating away from pure-play chipmakers toward hyperscalers that can monetize AI through existing platforms. The bank’s internet analyst Brian Nowak raised Alphabet’s price target to $415, projecting third-party TPU sales could bring up to $80 billion in revenue by 2028. Amazon was named a top pick with a $300 target as AWS growth could accelerate past 30% if infrastructure ROI improves even modestly.
Meta is seen as the most direct recovery play, with sentiment “troughed,” according to Nowak. The current advertising engine already benefits from AI-driven recommendations, and Morgan Stanley sees potential in Meta AI search, paid subscriptions, business agents, and selling excess compute — each possibly adding $1–$3 to 2028 earnings per share.
The broader pivot signals that investors are looking beyond semiconductor shortages to how cloud giants can turn AI infrastructure into recurring revenue.
