Nvidia Corp. is the "clear beneficiary" of Meta Platforms Inc.'s rampant spending on artificial intelligence, according to an analyst.
The Facebook parent company now expects to spend $30 billion to $37 billion on capital expenditures this year, whereas it was projecting $30 billion to $35 billion previously. The new "outlook reflects our evolving understanding of our AI capacity demands as we anticipate what we may need for the next generations of foundational research and product development," Chief Financial Officer Susan Li said on Meta's (META) earnings call Thursday afternoon.
Meta's talk of its spending plans for the year has Wells Fargo analyst Aaron Rakers feeling "increasingly confident" that Nvidia $(NVDA)$ will be able to deliver upside to its January-quarter results.
He also noted that while Meta didn't offer a forecast for capital spending beyond 2024, the company mentioned that the training and operation of future AI models will be even more compute intensive, albeit to an unknown extent. Chief Executive Mark Zuckerberg said that the company was "playing to win."
While Meta shares surged 20% in Friday trading and hit a new record, Nvidia shares experienced a nice boost as well. The chip stock was up 5% in Friday trading.
Rakers saw other winners from Meta's AI spending as well, including Advanced Micro Devices Inc. $(AMD)$, Arista Networks Inc. $(ANET)$ and Pure Storage Inc. (PSTG). Meta is deploying AMD's AI accelerator, Arista is a "key beneficiary" of Meta's adoption of Ethernet for back-end AI fabrics, and Pure Storage looks "well positioned" as a flash supplier.
AMD shares also gained over 4%.
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