Meta’s New Bedfellow Is Both Unusual, and Exciting

24/7 Wall St. Key Points:

• Meta (NASDAQ: META) has partnered with Arm Holdings (NASDAQ: ARM) to develop custom server chips, marking a shift in Arm’s business model toward in-house chip production.
• Meta’s planned $50 billion AI investment suggests significant potential for Arm to secure further orders if the initial chips perform well.
• Nvidia (NASDAQ: NVDA) recently reduced its stake in Arm, possibly before news of this Meta collaboration, raising questions about its long-term view on Arm’s prospects.
• Investors are looking ahead to ‘The Next Nvidia’ stocks to generate phenomenal wealth in 2025. Click here to see what all of the excitement is about before it’s too late.

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Transcript:

[00:00:04] Doug McIntyre: So Meta has decided to do something that I don’t think is traditional and that is, is that they have a relationship now with Arm. Can you walk us through why that’s in some ways sort of exciting?

[00:00:18] Lee Jackson: Yeah, it’s very exciting.

[00:00:19] Lee Jackson: And, Arm was a deal that came out early last year and, the stock was kind of flat for a while. I said, well, A R M H, it was kind of flat. And then boy, maybe it was a couple of years ago. And it was a pretty big IPO at the time that, boy, once the AI stuff took off, it took off. And basically, it’s more of a fab that constructs chips for people, but now they’ve decided to make their own chips.

[00:00:46] Lee Jackson: And they got a pretty large order from Meta. they’re developing a chip that will be a central processor for servers, and it’s not the kind of graphics processor that’s typically used in the heaviest AI workloads. But, with Meta being one of the first customers, they’ve got to be very excited about what You know, they’ve seen from this chip and what it can deliver.

[00:01:13] Lee Jackson: And so, that’s kind of a, that’s kind of a different look for Arm, which, which, interestingly enough, and we had talked about them, recently, as that was one of the stocks that NVIDIA kind of thinned their position in. They didn’t sell it all, but they did thin it. So, it was, I wonder if they, they sold it before they saw this acknowledgement from Meta that they were buying their chips.

[00:01:37] Doug McIntyre: Well, Zuckerberg, the CEO at Meta said that they plan to put 50 billion into AI. So if, if the Arm deal is working well, there’s certainly an opportunity, there’s certainly a big enough pocketbook for them to get some more money.

[00:01:53] Lee Jackson: God, yes. Well, and when you think of the money that I mean, meta is such an incredible story because you think of the money they lose every year on the metaverse stuff.

[00:02:04] Lee Jackson: I mean, it loses billions every year and it still doesn’t make a difference because they make so much money. Because they dominate the demo and they dominate advertising. And so it’s, it’s really interesting to see this order, Meta being one of Arm’s first customers for this new chip and this new processor.

[00:02:22] Lee Jackson: So. Here we go again. The more things change the more they say the same and vice versa.

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