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Wells Fargo analysts said in a note Thursday that Meta Platforms’ (NASDAQ:META) CapEx guidance is positive for Arista Networks (NYSE:ANET), NVIDIA (NASDAQ:NVDA), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Pure Storage, Inc. (NYSE:PSTG).
“Amidst increased question/concern that Meta would significantly reduce their forward capex guide in conjunction with 3Q22 results, tonight we got the absolute opposite,” wrote the analysts.
The analysts explained that Meta now expects 2022 CapEx in the range of $32-$33 billion, a tightening of the prior $30-$34 billion guide range. “The midpoint ($32.5B) would imply +69% y/y, or up from Meta’s capex spend at $19.244 billion in 2022,” they added.
“Meta is also announcing that it expects 2023 capex spend to be in the range of $34-$39 billion, an increase of +12% y/y at the midpoint. Meta is noting that 2023 investments will be driven by data centers, servers, and network infrastructure; increase in AI capacity is driving substantially all of 2023 capex growth.”
For Arista, the analysts commented that Meta is expected to be a 10%+ customer for Arista in 2022 and a key incremental growth driver, while for Nvidia, they believe “Meta’s specific comments on AI infrastructure investments will likely be taken as an incremental positive data point.”
On AMD, Wells Fargo believes Meta’s significant CapEx spend should be considered a net positive for AMD as the company announced a significant deployment win with Meta in late 2021. Finally, for Pure Storage, they think Meta’s CapEx spend should be a net-positive data point as it is the primary all-Flash storage provider for Meta’s AI RSC deployment.
