Nvidia Leads Chip Stocks Higher on Meta’s Planned Tech Binge

(Bloomberg) — Buried in a gloomy earnings report from Meta Platforms Inc. was a bit of good news — just not for the Facebook parent company.

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The shares of companies that supply data centers gained after Meta Platforms said it’s planning to spend even more on components next year as it invests in infrastructure to support its push into digitally immersive experiences.

In its third quarter earnings report, Meta Platforms projected capital spending of $34 billion to $39 billion in 2023, up from $30 billion to $34 billion this year. The comments sent Nvidia Corp. and Marvell Technology Inc. up more than 3% in postmarket trading.

Arista Networks Inc., which makes networking gear used in data centers and counts Meta as one of its biggest customers, is up more than 7%.

“Amidst increased question/concern that Meta would significantly reduce their forward capex guide in conjunction with third quarter results, tonight we got the absolute opposite,” Wells Fargo analysts led by Aaron Rakers said in a report.

While Meta’s spending plans are a boon to its suppliers, it was received poorly by investors skeptical of the high costs associated with its strategic shift. The stock dropped 14% after the company projected weaker-than-expected sales in the current quarter.