Meta Platforms Inc.’s significant investments in artificial intelligence (AI) are expected to greatly benefit Nvidia Corp., according to industry analyst Aaron Rakers.
Meta, the parent company of Facebook, recently revised its capital expenditure forecast for the year, raising it from $30 billion to $35 billion to a new range of $30 billion to $37 billion. Chief Financial Officer Susan Li explained that this adjustment reflects Meta’s evolving understanding of AI capacity demands as they prepare for future research and product development.
Rakers believes that Meta’s increased spending presents an opportunity for Nvidia to exceed expectations in its upcoming January-quarter results. He noted that while Meta has not provided projections for capital expenditure beyond 2024, the company recognizes that the training and operation of future AI models will require even more computational power. Meta’s CEO, Mark Zuckerberg, affirmed their determination to succeed in this rapidly advancing field.
As a result of this positive development, both Meta and Nvidia experienced a surge in their stock prices. While Meta’s shares soared by 22% in Friday trading, Nvidia’s shares also rose by 5%, reaching a new all-time high.
Rakers also identified other companies poised to benefit from Meta’s AI spending. Advanced Micro Devices Inc., Arista Networks Inc., and Pure Storage Inc. were all highlighted as potential winners. AMD’s AI accelerator, Arista’s Ethernet adoption for back-end AI fabrics, and Pure Storage’s role as a flash supplier all contribute to their favorable positions in the market.
It is evident that Meta’s commitment to investing in AI technology is creating ripple effects throughout the industry. As Nvidia takes center stage as the primary beneficiary, other companies are also positioning themselves to capitalize on this growing trend.
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