Meta Platforms plans to begin manufacturing its own AI chips next month, reducing reliance on Nvidia amid broader sector outperformance.
Nvidia shares have risen just 7% in 2026, significantly trailing the 58% gain in the PHLX Semiconductor Sector index. Investors have shifted focus to other AI chip stocks despite Nvidia’s strong financial outlook and revenue pipeline.
The underperformance follows reports that Meta Platforms will start producing an in-house AI chip in September. Meta aims to expand its AI compute power to 14 gigawatts by 2027, leveraging custom chips to enhance AI features on Instagram and Facebook. The chip was tested in six weeks, signaling rapid development.
Meta’s move could reduce its dependence on Nvidia, a key supplier, potentially impacting Nvidia’s long-term revenue growth in the AI chip market.