Meta’s Increased Spending Is Good News for Nvidia and AMD
Arista Networks, Nvidia, and AMD rose after Meta said it intended to spend more on data centers and network infrastructure in 2023.
Meta Platform’s results disappointed the market on Wednesday but its plan to increase spending on data-center and network infrastructure gave a boost to some stocks.
Arista Networks (ticker: ANET), a provider of networking hardware which counts Meta among its top customers, was a top beneficiary of the plan with its shares climbing nearly 11% on Thursday.
Nvidia (NVDA) was up more than 5%, and Marvell Technology (MRVL) was up more than 7%. Advanced Micro Devices, which last year said that Meta would use its chips in its data centers, climbed around 3.5%.
Facebook-parent Meta (META) had said in its third-quarter earnings that it expects capital spending in 2022 of $32-$33 billion. In 2023 it expects that to rise to $34-$39 billion, driven by investment in data centers, servers, and network infrastructure.
KeyBanc Capital Markets analysts said in a note that Meta’s planned operating and capital spending forecast for 2023 was meaningfully higher than expected, putting pressure on its margins. They added: “Management acknowledged it would like to invest more as economic conditions improve.”
Write to Adam Clark at adam.clark@barrons.com