Key Morningstar Metrics for Meta Platforms
- Fair Value Estimate: USD 850.00
- Morningstar Rating: ★★★★
- Morningstar Economic Moat Rating: Wide
- Morningstar Uncertainty Rating: High
Advanced Micro Devices AMD and Meta Platforms META announced an expanded strategic partnership wherein Meta may deploy up to 6 gigawatts of AMD’s customized GPU solutions, with the first GW expected to begin in the second half of 2026. Meta has the option to acquire 160 million AMD shares via warrants.
Why it matters: We see Meta pursuing a multipronged silicon strategy. The firm is aiming to leverage Nvidia for frontier model training, AMD for expanding inference needs, custom silicon from MTIA for core recommendation algorithms, and TPUs from Google for possible expansion of Llama workloads.
- We see key benefits in adopting this portfolio approach, one not too dissimilar from other hyperscalers (such as Alphabet, Amazon, and Microsoft) which use a mixture of first- and third-party silicon to meet their compute needs.
- The benefits include cost optimization (matching workloads with silicon efficiently) and managing potential supply chain risks, such as overdependence on a potential rival like Google or one chip provider like Nvidia.
The bottom line: We maintain our USD 850 per share fair value estimate for wide-moat Meta and continue to view the stock as undervalued.
- We think that as 2026 progresses, investors will be able to see clear returns on Meta’s artificial intelligence investments, primarily via its impressive ad business, and that they will have more confidence in the firm’s AI chops, with its new large language model being a significant upgrade to the current Llama 4.
Big picture: Meta’s scale, with more than 3.5 billion daily active users across its platforms, is such that the firm has to hyper-optimize its infrastructure to be able to serve GenAI features in a cost-effective way.
- With the firm’s AI models managing hundreds of billions of AI model interactions daily, improving performance-per-watt by even as much as 10% for a given workload can translate to millions of dollars in annual savings.
