Meta eyes AWS veteran as AI cloud race keeps reshaping tech stocks

Meta Platforms is reportedly trying to add a veteran Amazon Web Services executive, a move that could matter for investors tracking how Big Tech turns artificial intelligence spending into revenue. The report landed during a rough Friday for major tech stocks, with Amazon, Alphabet, Meta and Microsoft weighing on the broader market, according to CNBC’s Investing Club with Jim Cramer.

CNBC said stocks pulled back Friday after another volatile week. The S&P 500 was on pace to fall more than 1% for the week, while the Nasdaq was headed for a drop of more than 2%. The Dow was roughly flat, according to CNBC.

The pressure was concentrated in hyperscalers, the large cloud and platform companies that rent massive computing capacity and run the infrastructure behind much of the AI boom. CNBC listed Amazon, Alphabet, Meta and Microsoft among the weak spots. Semiconductor and AI infrastructure names took early selling pressure, though CNBC said Micron, Sandisk, GE Vernova, Eaton and Qnity Electronics later bounced as buyers stepped in.

Meta’s reported target has AI infrastructure experience

Dave Brown, a 19-year Amazon Web Services executive, is leaving the company and is in talks to join Meta, CNBC reported, citing multiple reports. Brown led AWS’s compute and machine learning services division, which included Amazon’s Trainium AI chips.

Trainium is Amazon’s custom silicon, meaning chips designed for a company’s own computing needs rather than bought off the shelf. In AI, custom chips can matter because training and running large models require large amounts of computing power and electricity. If a company can get more performance for each dollar spent, its cloud economics can improve.

Brown told CNBC’s Investing Club earlier this year that AI infrastructure competition would be shaped by “price performance,” or delivering more computing at a lower cost. He said customers gain a strategic edge if they can find processors that provide more performance for fewer dollars.

If Brown joins Meta, CNBC said his experience could support Meta’s interest in building a cloud computing business. Meta CEO Mark Zuckerberg said at the company’s May shareholder meeting that such a business is “definitely on the table,” according to CNBC. Cramer said earlier this month that Meta plans to sell computing power to outside customers as another revenue source, CNBC reported.

The New York Times reported Friday that Anthropic was working on a deal to lease computing power from Meta that could be worth up to $10 billion over two years. CNBC’s Kate Rooney confirmed that Meta and Anthropic were in very early talks, citing a person familiar with the matter.

Cramer’s market notes focused beyond megacap tech

Cramer also gave CNBC Investing Club subscribers several market observations Friday:

• He said investors were widening their tech focus to aerospace, noting GE Aerospace rose nearly 3% and Honeywell Aerospace gained more than 2%.
• He cautioned that anyone choosing one tech stock should wait until late in the session, saying investors using margin, or borrowed money, could be forced to sell.
• He said health care could stay attractive for some time and cited Abbott Laboratories as worth review, while saying Johnson & Johnson looked strong after what he called a “spectacular quarter.”
• He said industrials could be difficult because of data center exposure and said he preferred transportation stocks such as FedEx and FedEx Freight.

Earnings season accelerates next week, with about 80 S&P 500 companies and six stocks in Cramer’s charitable trust portfolio scheduled to report, according to CNBC. CNBC’s Investing Club said Goldman Sachs looked strongest among the big banks that had already reported, while Wells Fargo showed improvement that the market later rewarded.

Next week’s calendar tilts toward industrials, autos and defense, CNBC said. Alphabet and Intel are also scheduled to report. Alphabet will be the first major hyperscaler to update investors, and CNBC said investors will be listening for comments on capital expenditures, a term for long-term spending on assets such as data centers, and Alphabet’s June equity offering of $84.75 billion.

This story draws on original reporting from CNBC.