Meta Platforms (NASDAQ: META) is preparing to move its custom in-house AI chip, called Iris, into production in September as part of an ambitious infrastructure expansion.
The move is central to CEO Mark Zuckerberg’s broader plan to double Meta’s data center capacity to 14 gigawatts by 2027, according to an internal memo.
Meta partnered with Broadcom to design the Iris chip, which will be manufactured by Taiwan Semiconductor Manufacturing for deployment across its data centers.
The application-specific integrated circuit is designed to lower AI computing costs and tailor compute resources to Meta’s own use cases, including advertising and recommendation systems.
“One of the primary goals of our Meta Compute initiative is to lead the industry in efficiency of building compute, and we expect that will be a strategic advantage over time,” Zuckerberg said during the company’s first-quarter earnings call.
Meta CFO Susan Li acknowledged earlier this year that data center capacity planned 12 to 36 months ago is no longer sufficient to meet current demand.
New data center construction requires multiyear lead times, even as demand for AI processing power continues to accelerate, creating a significant bottleneck across the industry.
The stakes are high for Meta, whose social media platforms serve over 3.5 billion daily active users and rely heavily on AI to drive advertising performance and revenue growth.
AI has already delivered measurable financial results for the company, helping push revenue up 33% year over year in the first quarter of 2026.
Meta has said it plans to spend up to $145 billion on capital expenditures this year, part of a broader industry trend where the top four hyperscalers plan to collectively spend between $600 billion and $700 billion on capex in 2026.
Those spending levels have made Wall Street cautious, and Meta’s stock has underperformed year to date as investors question whether returns will justify the investment.
Despite that skepticism, Meta currently trades at a forward price-to-earnings multiple of 21, a discount compared to most other Magnificent Seven peers, which largely trade at multiples of around 25 or higher.
Meta holds the highest gross margin of any Magnificent Seven company, and its $124 billion in trailing cash flow from operations gives it considerable firepower to fund ongoing AI initiatives.
Beyond advertising, Meta’s infrastructure investments are also laying groundwork for new products including AI agents designed for both personal and business use.
If the Iris chip delivers meaningful efficiency gains, the market may eventually re-rate Meta’s stock to a valuation more consistent with its peers and its underlying profitability.
