Nvidia's new Meta deal may not be great news for these other tech stocks

By Emily Bary

Shares of AMD and Arista fell after Nvidia and Meta announced an expansion of their partnership

Broadcom competes against Nvidia in the market for AI chips.

Nvidia has expanded its relationship with Meta Platforms in a big way, and that's weighing on the shares of companies who also want in on major chip business.

Through the latest version of the partnership, Meta (META) plans to build hyperscale data centers and deploy Blackwell and Rubin graphics processing units from Nvidia (NVDA).

"We're excited to expand our partnership with Nvidia to build leading-edge clusters using their Vera Rubin platform to deliver personal superintelligence to everyone in the world," Meta CEO Mark Zuckerberg said in a press release Tuesday.

Meta will also integrate Nvidia's Spectrum-X Ethernet switches.

See also: Can Nvidia's stock approach $400? Here's why earnings may mark the start of a big rally.

The social-media company recently gave a forecast for $115 billion to $135 billion in capital expenditures for 2026, inclusive of finance leases.

"Deep engineering co-design and software optimization efforts are expected to enhance performance per watt, scalability and operational efficiency, reinforcing Nvidia's position at the center of Meta's next-generation AI infrastructure roadmap," Raymond James analyst Simon Leopold said in a note to clients.

Nvidia shares were up 2.2% in premarket trading Wednesday, while Meta shares were gaining 0.3%.

Elsewhere in the chip sector, there were other moves. Shares of Advanced Micro Devices (AMD), which is trying to compete against Nvidia in the GPU market, were off 1.4% premarket. Shares of Broadcom (AVGO), which makes application-specific integrated circuits that are an alternative to GPUs, were down fractionally.

More from MarketWatch: AMD is falling behind, warns this analyst who says other chip stocks are better bets

Still, Leopold wrote that he thinks Meta "will continue to multisource," meaning rely on different partners. And he called the new relationship an "obvious positive" for Arm Holdings (ARM), a chip designer.

Shares of Arista Networks (ANET), which makes switching products that rival Nvidia's, were down 2.5% in Wednesday's premarket trades. But Evercore ISI analyst Amit Daryanani encouraged investors to "buy the dip" following a conversation with Arista's management team. He noted that the Nvidia deal with Meta is "more of a reiteration" of a previously announced agreement between the two companies, adding that the development isn't likely to impact Arista's guidance from last week.

See also: Arista succeeds where Cisco came up short - to the benefit of its stock

-Emily Bary

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02-18-26 0718ET