According to the report, the US social networking giant Meta released its third-quarter financial report and announced that it will continue to invest in digital infrastructure next year to support the metaverse and immersive experience strategy. Development, the company will also invest more capital to purchase equipment and hardware. The news sent shares of companies that supply data center equipment to Meta jumping.
Meta forecasts that corporate capital spending in 2023 will be between $34 billion and $39 billion, up from $34 billion this year. In after-hours trading on U.S. stocks, the good news from Meta sent shares of companies including Nvidia and Marvell Technologies up more than 3 percent.
Moreover, Arista Networks manufactures networking equipment for data centers, and Meta is the company’s main purchasing customer. The company’s shares jumped 7% in after-hours trading on the positive stimulus.
Aaron Rakers, an analyst at Wells Fargo, said in an analysis that there was a lot of concern that Meta could cut sharply in the future, accompanied by less-than-satisfactory third-quarter results, but on Wednesday, the opposite was heard.
The news that Meta has started to increase capital is undoubtedly a good boost for the company’s suppliers, but it is not good news for Meta’s investors. Investors are worried that Meta’s strategic transformation towards the metaverse concept will bring come at a considerable economic cost.
In addition to increasing capital expenditures, Meta’s earnings report also showed that its current fourth-quarter performance outlook was below Wall Street analysts’ expectations. These unfavorable factors caused Meta’s own stock price to plummet 14% in after-hours trading.