Breaking News | Meta AI Infrastructure Costs Cut in Half, Threatening AWS Dominance

An internal Meta memo reviewed by Reuters revealed the company is building AI computing capacity at approximately $22 billion per gigawatt, roughly half BofA Securities' prior estimate of $45 billion per gigawatt. Meta targets 14 gigawatts of total capacity across 2026-2027, with 6.5 gigawatts planned for 2026 (including 5.5 gigawatts in the second half). The revised cost structure aligns with Meta's raised $125-$145 billion capital budget for 2026.

BofA analyst Justin Post reiterated a Buy rating with an $835 price target, noting that if Meta can maintain build costs below $30 billion per gigawatt, returns would exceed those from Amazon and Google cloud businesses, which generate $10-16 billion in annual revenue per gigawatt. CEO Mark Zuckerberg has discussed renting out AI compute in offerings comparable to AWS Bedrock and CoreWeave.

Separately, Meta plans to manufacture a custom AI chip, code-named Iris, starting September 2026 with Broadcom and Taiwan Semiconductor, with new chips rolling out every six months through 2027. Post clarified Iris is not driving 2026 cost improvements-those stem from better execution. The European Commission also issued preliminary findings Friday that Instagram and Facebook breached the Digital Services Act, with potential fines exceeding $12 billion.

• Q2 2026 earnings report: guidance sits at $58-61 billion revenue; watch for management commentary on formalizing AI compute rental offerings

• September 2026: Iris chip enters manufacturing with Broadcom and TSMC

• EU Digital Services Act ruling: potential fine exceeding $12 billion for addictive design violations