Industrial Securities: News about Meta renting out its computing power should not be interpreted too pessimistically as an oversupply of computing power.

Glonghui, July 2｜On Wednesday, news that Meta plans to cross over into selling surplus AI computing power triggered a sharp correction in global AI hardware and high-flying tech stocks. Industrial Securities believes that the news about Meta leasing and selling computing power externally should not be interpreted too pessimistically as an indication of a surplus in computing power or a comprehensive slowdown in Capex, because (1) this is not entirely new news; there were related reports as early as this May; (2) Meta is a special case among hyperscalers, with its consumer-focused business model resulting in AI monetization relying mainly on advertising. Its exploration into cloud services can enhance shareholder returns and cash flow; (3) Meta still faces a shortage of computing power. Just this week, it was reported that Google restricted its access, and Meta signed an agreement with Crusoe; (4) hardware demand comes from inference, not inflation on the training side.