Meta’s plan to invest more heavily in artificial infrastructure caused Meta (META) stock to sink Thursday, but the tech giant’s capex news lifted shares of tech hardware companies, including Nvidia (NVDA), Arista Networks (ANET), Dell (DELL), and Super Micro Computer (SMCI).
Later Wednesday, Meta announced an increase in its cash spending to finance its artificial ambitions. The Facebook parent forecasts capex spending of $35 billion to $40 billion this year, up from its prior range of $30 billion to $37 billion.
Another indication of a tech giant’s battle against AI is Meta’s increase in expenditure. Tesla (TSLA) on Tuesday also announced increased spending on AI infrastructure.
In a client note on Thursday, Wedbush Securities analyst Matt Bryson stated, “We believe both these pieces of news point to a strong increase in demand for AI servers, particularly Nvidia GPUs (graphics processing units).” With a price target of $1,000, he rates Nvidia stock as “perform.”
Nvidia Stock Rises On AI Hardware Investments
In evening trades on the stock market today, Nvidia stock rose 4.1% to $829.
Among other semiconductor stocks with AI exposure, AMD (AMD) increased 1.6% on Thursday. Broadcom (AVGO) advanced 3.5%, and Marvell Technology (MRVL) rose 3.4%.
Meta’s extreme capex spending will have many beneficiaries, Jordan Klein, managing director for the technology, media, and telecoms sector investing at Mizuho Securities, said in a client note. In addition to GPUs and practice processors, the investment surge did pull makers of communication and visual products, memory, storage, and AI servers.
Arista Networks (ANET) is one such beneficiary, Klein said. ANET investment was up 4.7% to $266.63 in evening investments on Thursday.
According to Barclays analyst Tim Long, Arista receives a sizable portion of its revenue from Meta and Microsoft (MSFT), according to a client note from Barclays.
Samik Chatterjee, an analyst for JPMorgan, said Meta’s opinion of his “top AI picks,” Arista and Coherent (COHR), is positive.
Server makers Dell Technologies (DELL) and Super Micro Computer (SMCI) also rose on Thursday. Dell climbed 3.6% to $124.53. Super Micro increased 5% to $792.44.
Nvidia Among “Best Artificial Plays”
Evercore ISI researcher Mark Lipacis stated in a consumer note that Meta’s analysis supports his “top AI plays.” They include Nvidia property, Broadcom, AMD, and Marvell.
“Competition drives budget, and the aggressive liquids around AI seem to be flowing,” he said. “After Meta’s AI capex uptick, we wouldn’t be surprised to see other companies discuss an upward bias to spending on AI infrastructure through 2024 and 2025.”
Following the market close on Thursday, Microsoft and Google’s parent company Alphabet (GOOGL) will release their March quarter results. Investors will now concentrate on their planned budget paying.
