META Deepens AI Strategy With New Arm CPU Initiative: What's Ahead?

Meta Platforms META is spending heavily on building its AI infrastructure, and its latest partnership with Arm is a step forward in developing AI-optimized data centers. META and Arm are collaborating to develop a new class of CPUs to support growing AI workloads and general-purpose computing. The first release of this multiple generations of cutting-edge CPUs – Arm AGI CPU – is delivering faster performance per rack, far more efficiently than legacy CPUs. The Arm AGI CPU is suitable for META’s family of apps and works alongside the company’s custom MTIA silicon.

Arm joins a long list of META partners, including AMD and NVIDIA, which are supporting the social networking giant’s AI initiatives. META’s AMD deal will see it using the latter’s custom MI450, along with 6th-generation EPYC CPUs, running on ROCm software and built on the AMD Helios rack-scale architecture. AMD and Meta Platforms are also expanding their CPU partnership, with AMD set to be a lead customer for both Venice and Verano, the next generation of EPYC processors.

NVIDIA’s collaboration with META will see it supporting the latter’s build-out of data centers optimized for AI training and inference, as well as its core business. META’s data centers are pivotal to bringing personal superintelligence and a better app experience to everyone across its platforms. These data centers consume huge amounts of electricity, and META is now tapping nuclear energy to fulfill this requirement. The company has signed long-term nuclear power agreements with Vistra, TerraPower and Oklo that are designed to supply up to 6.6 GWs of nuclear electricity by 2035.

Meta Platforms now expects 2026 capital spending between $115 billion and $135 billion. Per CNBC, Alphabet GOOGL, Meta Platforms, Amazon AMZN and Microsoft, on a combined basis, are expected to spend roughly $700 billion on developing AI infrastructure in 2026. META’s improved recommendation system is driving up user engagement. AI usage is making the company a popular name among users as well as advertisers. It expects to advance the capabilities of underlying media generation models and ship new features to further enhance the product experience in 2026. META expects total revenues between $53.5 billion and $56.5 billion for the first quarter of 2026. The Zacks Consensus Estimate for revenues is currently pegged at $55.34 billion, suggesting 30.5% growth from the figure reported in the year-ago quarter.

META Faces Tough Competition in the Ad Space

Alphabet’s Search business is benefiting from AI infusion. The company has been actively embedding AI, especially within Search, to enhance user experience, provide better AI-focused features and consequently improve ad performance. AI Overviews and AI Mode are driving overall queries and commercial queries, thereby driving monetization opportunities. Alphabet’s Google advertising revenues increased 13.6% year over year to $82.28 billion and accounted for 72.3% of total revenues in the fourth quarter of 2025.

Amazon’s rich partner base is allowing advertisers to buy ad space on Netflix, Spotify and SiriusXM Media through Amazon Ads, thereby expanding its advertising reach beyond its own properties. The strong performance in advertising reflects successful AI-powered optimization of the platform and growing market share in digital advertising. In the fourth quarter of 2025, advertising services sales increased 22% year over year to $21.3 billion.

META’s Share Price Performance, Valuation & Estimates

Meta Platforms shares have plunged 17.1% year to date, underperforming the broader Zacks Computer and Technology sector’s drop of 5.6%.

META Stock’s Price Performance

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Meta Platforms stock is trading at a premium, with a forward 12-month price/sales of 5.33X compared with the Zacks Internet Software industry’s 3.72X. META has a Value Score of C.

META Stock Trades at a Premium

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The Zacks Consensus Estimate for first-quarter 2026 earnings is pegged at $6.67 per share, unchanged over the past 30 days, suggesting 3.7% year-over-year growth.

Meta Platforms, Inc. Price and Consensus

Meta Platforms, Inc. price-consensus-chart | Meta Platforms, Inc. Quote

Meta Platforms currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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