Meta’s power move Part 2

$Meta Platforms(META.US)

Continued from Part 1.

You look for ‘mercenaries’ who offer you what you need and strike deals with them. He did this by buying compute from Nebius, Coreweave and even Google.

It’s like amassing a huge army knowing it carries a huge advantage. Rather than commit to recruiting at large costs, he let these mercenaries shoulder the costs yet enabling him to use them.

Now after securing all these supplies and hoarding them, what is next?

Now think. Is it really smart to flood the market with supply when you will be affected by that as well? What he is doing is ‘asserting control’. When you have a precious commodity which is in demand (Think OPEC for oil), the market is at your behest. You CONTROL supply and henceforth price.

You want to build more compute? Flood the market with supply and suppress the market and buy cheap. You still benefit from selling and yet build infra for the future.

You want to constrict supply? Curtail selling and jack prices up when demand is going up. Your profit margins go up.

The only way to do this is when you have a majority share in that commodity.

Now think again. Is Zuckerberg a novice who ‘overbuys’ compute and now needs to sell excess supply? Or is he positioning as a huge AI compute provider in an upcoming world where AI is everywhere and compute is through the roof?

Look at all the hyperscalers’ reports. They are free. Look at the trend. Do they look like cutting back? The upcoming earnings will reveal more.

But having said all these, the technicals are stretched and caution still prevails.

But narratives are narratives. Look beyond the noise. The price and data sets usually are more indicative.

Thanks for reading. Hope that helps and stay safe!