Meta Stock Jumps on AI Monetization Plan, Custom Chip Progress

Shares of Meta Platforms (META) surged in pre-market trading Tuesday, propelled by a series of strategic AI announcements that signal a clearer path to monetizing its substantial investments in the technology and developing its own hardware.

New AI Model Signals Monetization

Meta unveiled Muse Spark 1.1 on July 9, which the company described as its most advanced AI model for coding and complex tasks. The launch marks a direct challenge to competitors like OpenAI and Anthropic in the growing market for so-called agentic AI.

Crucially for investors, the new model represents a strategic shift from the company's previous open-source approach. Meta will now require developers to pay for access, establishing a direct revenue stream from its AI research and development—a move long anticipated by the market. Chief AI Officer Alexandr Wang called the update the company’s "strongest model for agentic and coding work yet."

In-House Hardware and Infrastructure Advances

Adding to the bullish sentiment, Meta is making significant progress on its custom AI hardware. The company plans to begin manufacturing its AI chip, code-named "Iris," in September as part of its MTIA project, according to an internal memo reviewed by Reuters. The initiative, in partnership with Broadcom for design and TSMC for production, is aimed at reducing Meta's reliance on costly GPUs from Nvidia and AMD.

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These hardware efforts are complemented by a recently announced $9.1 billion investment to build the company's largest AI data center outside the U.S. in Alberta, Canada. Together, these developments are seen as easing investor concerns about the return on Meta's massive capital expenditure program in artificial intelligence.

Regulatory Headwinds and Market Outlook

Despite the AI-driven optimism, the company faces persistent regulatory and geopolitical challenges. The European Commission issued a preliminary finding that Meta violated the Digital Services Act with addictive design features, carrying a potential fine of up to €11 billion. Separately, Meta is unwinding its acquisition of Chinese AI startup Manus at Beijing's direction, with Tencent reportedly in talks to take over its stake.

Investors are now looking ahead to Meta's second-quarter earnings report, expected on July 29. Wall Street analysts are projecting earnings per share of $7.18 on revenue of $60.22 billion, which will be a key test of whether the current momentum can be sustained.