Shares of Meta Platforms Inc. received a powerful fundamental boost after the US tech giant announced plans to launch its own cloud business to sell excess computing power, aiming to allay investor fears over the company’s heavy spending on data center infrastructure. This strategic move places the social media giant in the same market as cloud computing leaders like Amazon, Microsoft, and Alphabet.

Meta’s figures landed significantly higher than market expectations last quarter, as the company’s quarterly revenue jumped 33% to hit $56.3 billion. The current upside was driven by the efficient integration of artificial intelligence algorithms, which helped boost ad impressions by 19% and push average ad prices up by 12%.

The current stock valuation at a forward price-to-earnings ratio (P/E) of just 18 times gives Meta a highly attractive market pricing for a tech sector leader with such growth rates. Analysts note that launching this new division will allow investors to stop worrying about chip expenditures and refocus on the stellar results of the core business.

Meta overcame a major hurdle of Wall Street skepticism regarding the returns on its infrastructure spending. According to Bloomberg, the company is currently choosing between selling direct access to its computing capacity or hosting large language models, turning its massive capital investments into a new high-revenue segment following the example of similar solutions by SpaceX.