Meta's Capex Hike Signals Sustained AI Demand for Nvidia and Micron

Meta Platforms (META) has revised its capital expenditure guidance upward, signaling a continued aggressive push into AI infrastructure despite investor concerns over spending levels. The company now expects annual capex to range between $125 billion and $145 billion, an increase from the previous estimate of $115 billion to $135 billion. This spending surge is part of a wider trend among the industry's hyperscalers. Recent quarterly reports from Alphabet, Amazon, and Microsoft show accelerating cloud growth, with Google Cloud rising 63%, Microsoft Azure increasing 39%, and Amazon Web Services growing 28%. This collective momentum suggests the AI investment cycle remains robust and may still be in its early stages. CEO Mark Zuckerberg attributed the $10 billion increase largely to higher component costs, specifically highlighting memory pricing. This trend directly benefits Micron (MU) and Nvidia (NVDA), the latter of which is poised to launch its new Rubin platform in the second half of the year. The shift toward higher pricing, rather than simply increased capacity, suggests expanding margins for these chipmakers. While Meta's stock experienced some volatility following the higher spending forecast, the company's fundamental growth remains strong. Meta reported a 33% jump in revenue for the first quarter, fueled by a 19% increase in ad impressions and a 12% rise in average price per ad. For the broader market, the data suggests that the AI boom continues to drive significant capital inflows into the hardware layer of the tech stack.