Reports that Meta Platforms (META +2.24%) has signed a "multi-year" deal to secure flash memory from Sandisk (SNDK +12.70%) sent Sandisk stock flying -- and Meta stock dying -- early this morning. Meta stock initially fell 4% on the news, before recovering.
As of 11:40 a.m. ET, Meta stock is back in the green, up 0.5%.
Image source: Getty Images.
Details, please
Citing internal Meta documents, Reuters reports the social media giant will buy NAND from Sandisk, DRAM from Samsung, and fiber optics from Sumitomo as it builds out its very own artificial intelligence computing infrastructure.
Additional beneficiaries may include Broadcom (AVGO +4.26%), which is helping Meta design Iris AI semiconductors for its data centers, and also Taiwan Semiconductor Manufacturing (TSM +0.48%), which will contract-manufacture these AI chips.
All these companies are declining to officially confirm the details of the Reuters report. Regardless, investors are "buying the rumor" and shares of all the U.S. publicly traded stocks named -- Sandisk, Broadcom, and TSMC -- are moving higher today.
NASDAQ: META
Key Data Points
Why Meta stock is slumping
Meta stock, on the other hand, is not moving higher, or at least not much. Indeed, Meta stock initially sold off on this news.
Why is that? Consider that Meta has plans to spend $145 billion on AI infrastructure this year, and today's Sandisk news seems to confirm this plan is on track. On the one hand, that kind of money will buy Meta a lot of AI capacity as it competes with the likes of Alphabet, OpenAI, and Anthropic. On the other hand, $145 billion is even more than the $136.6 billion Meta is expected to bring in via cash from operations this year, according to data from S&P Global Market Intelligence.
Meta's skating close to the edge these days, and if that makes investors nervous, I totally understand.
