Meta’s $145 Billion Wager: Custom Chips and a Cloud Business Redefine the Company

Meta plans to launch custom AI silicon ‘Iris’ in 2026 and enter the cloud market, fueling a 13% weekly stock surge and signaling a major shift beyond social media.

Meta Platforms is embarking on what may be its most consequential strategic overhaul since the rise of short-form video, simultaneously developing proprietary AI silicon and preparing to muscle into the cloud-computing market. The dual push has electrified investors, flipping the stock from one of the S&P 500’s worst performers six weeks ago to one of its three best. By Wednesday, shares had reached EUR 597.80, up 3.21% on the day and 13.26% over the past week. Over the last month the gain swells to 16.80%.

The catalyst is a pair of reports that together signal a fundamental departure from Meta’s traditional social-media-only model. The company plans to begin manufacturing its own artificial-intelligence chip, code-named “Iris,” in September 2026 under the multiyear “Meta Training and Inference Accelerator” program. Outsiders expect the chip to first power the recommendation algorithms of Facebook and Instagram, cutting dependence on external suppliers like Nvidia and potentially lowering costs per compute unit. Reuters has reported that Meta intends to introduce new custom chips roughly every six months, backed by multiyear supply agreements with Broadcom and TSMC.

Equally transformative is the decision to monetize spare computing capacity. Until now Meta ran all its infrastructure internally, a stance CEO Mark Zuckerberg reaffirmed not long ago. That is about to change. Bloomberg reported on July 1 that Meta is building a cloud business that would rent out excess AI compute cycles to external customers, directly challenging Amazon Web Services and Microsoft Azure. The news triggered an 8.8% single-day surge, and the stock added another 15% in the following week as the company unveiled new AI models, Muse Image and Muse Spark 1.1.

The infrastructure required for this ambition is staggering. Meta aims to have 7 gigawatts of total computing capacity deployed by the end of 2026, with 1 gigawatt already added in the first half of this year and another 2.5 GW due by December. By 2027 the target rises to 14 GW. Internal forecasts peg the total investment in energy and hardware needed to reach that level at up to $145 billion. To help fund the build-out, Meta placed a $25 billion bond in late April, one day after its first-quarter earnings report showed higher capital expenditure guidance tied to data-center costs.

Analysts see the combination of vertical integration and new revenue streams as a decisive shift in the investment narrative. “The earlier compression in Meta’s valuation was largely driven by a lack of investor confidence that the company could monetize its AI spending,” said Angelo Zino, chief technology analyst at CFRA. “In fact, Meta has probably monetized AI within its own ecosystem more effectively than any other tech company. Now, with the cloud business and new product introductions, the foundation for a strong rally in the coming quarters is in place, especially given the current valuation.” BofA analyst Justin Post noted that an internal memo pointed to 2026 capacity expansion running well ahead of his prior estimates, suggesting Meta has managed to make each megawatt of capacity much cheaper than the market anticipated.

The market’s renewed enthusiasm has pushed the stock 14.65% above its 50-day moving average of EUR 521.41 and 9.20% above the 200-day line of EUR 547.43. The relative strength index sits at 68.7, approaching overbought territory, while annualized volatility of roughly 50% underscores the heightened uncertainty. At Wednesday’s close, Meta trades 11.80% below its all-time high of EUR 677.80 reached in July 2025.

The real test arrives on July 29, 2026, when Meta reports second-quarter results after the U.S. market close. Analysts expect revenue growth of 27% alongside earnings per share that are nearly flat year-over-year. The conference call at 4:30 p.m. Eastern time will be the first chance for investors to hear management’s detailed roadmap for the cloud business and the Iris chip program — and to judge whether the recent price action reflects solid fundamentals or simply speculative anticipation.