Meta shares jump 7.5% on plan to make custom Iris AI chips
Meta's plan to manufacture its own custom AI silicon starting in September signals a strategic push to slash massive computing costs and reduce reliance on Nvidia, sending its stock sharply higher.
Meta shares surged 7.5% after the company confirmed plans to begin production of its custom artificial intelligence chip, code-named Iris, in September. The Facebook and Instagram parent is partnering with Broadcom for design and Taiwan Semiconductor Manufacturing Co. for fabrication.
Iris is the latest iteration of Meta’s in-house Meta Training and Inference Accelerator programme. According to an internal memo, the chip tested successfully in just six weeks with no major issues, marking a stark turnaround for a hardware initiative that has struggled for over five years. Meta intends to use the processors to support its social media platforms while expanding its total computing capacity to 14 gigawatts next year.
For investors, the primary significance lies in margin expansion and supply chain independence. Meta expects to spend up to $145 billion on AI infrastructure this year. Developing proprietary silicon tailored to its specific workloads offers a pathway to reduce these massive computing expenditures and lessen the company's dependence on dominant chip suppliers like Nvidia and Advanced Micro Devices.
To support this manufacturing ramp, Meta has locked in multi-year supply agreements with Samsung Electronics for memory, Sandisk for flash storage, and Sumitomo Electric for fibre-optic equipment. Furthermore, the company plans to launch a new AI chip roughly every six months through 2027, a pace that doubles the standard industry cadence.
The hardware rollout coincides with a broader push to commercialize Meta's AI investments. The company recently granted developer access to its Muse Spark AI model, competing directly with OpenAI and Anthropic. According to a previous Bloomberg report, Meta is also exploring ways to monetize its rapidly expanding AI infrastructure by renting out data centre computing capacity to third-party developers.
Thursday's 7.5% rally extends a strong July recovery that has pushed the stock up 20% for the month, reversing an 11% decline in June. After hitting a record high of $796, shares had fallen below $520 before finding a floor. Despite rallying nearly 30% from that trough, the stock still trades roughly 15% below its peak, capping a multi-year run that saw shares surge 730% from late 2022 to July 2025.
