Meta’s AI development efforts could benefit Nvidia, AMD and others: Wells Fargo

Meta Platforms (NASDAQ:META) fourth quarter revenue beat and solid outlook saw Wells Fargo highlight positive derivaties for other companies.

The analysts said that while Meta is not providing a capex guide beyond 2024, the company noted that it expects its ambitious long-term Artificial intelligence, or AI, development efforts will need growing infrastructure investments beyond 2024.

Meta added that AI training and the operations of future models will be even more compute-intensive; however, the degree is not yet certain, the analysts added.

In addition, Meta noted that leading edge large language model, or LLMs, have been trained on about 10x the amount of compute each year.

Meta is focused on heavy investments to build the most advanced AI clusters — using novel data center and the evolution of internal silicon efforts.

The analysts highlighted positive impact of Meta’s AI efforts on certain companies.

Nvidia (NVDA) is the clear beneficiary; increasingly confident in solid January quarter upside.

Advanced Micro Devices (AMD): Meta is deploying AMD’s MI300X GPUs.

Arista Networks (ANET): Meta is Arista’s largest customer (26% of 2022 revenue); key beneficiary of Meta’s adoption of Ethernet for back-end AI fabrics (although the analysts continue to monitor Nvidia’s Spectrum-X competitive positioning).

Pure Storage (PSTG): The analysts mull PSTG is well positioned as Meta’s primary back-end all-Flash storage provider in AI Research SuperCluster, or RSC, deploys.

Meta’s fourth quarter revenue rose 25% overall to top $40.1B verus Street consensus for $39.2B. The social-media giant also guided to the upside for the first quarter.

Meta Platforms (META) has a Strong Buy rating at Seeking Alpha’s Quant Rating system, which consistently beats the market. Meanwhile, the Seeking Alpha authors’ average rating is Buy and the average Wall Street analysts’ rating is Strong Buy.