Meta capital expenditures increase instead of decrease, supply chain customer confidence rebounds
Recently, tech giants have been reporting news of falling revenue, lower-than-expected financial reports, layoffs and spending cuts, but Facebook parent company Meta has not done so. Expanding capital spending next year is encouraging its customers.
According to the financial report, Meta’s revenue in the third quarter of this year was US$27.7 billion, a year-on-year decrease of more than 4%, and it declined for two consecutive quarters; profit decreased by 52% year-on-year to US$4.4 billion. In the first three quarters of this year, Meta’s department of creating metaverse products lost more than $9 billion.
According to a report released by an American research institute, Meta’s capital expenditure in the third quarter was US$9.5 billion, which was about 32% higher than market expectations, but it adjusted its 2022 full-year capital expenditure target from US$30 billion to US$34 billion to US$32 billion to US$33 billion. It suggested that capital expenditures in the fourth quarter of this year may increase by 6% quarterly to $10.1 billion.
Meta forecasts full-year capital expenditures of $34 billion to $39 billion in 2023, equivalent to an annual increase of 12% at the median, which also beats market sentiment.
Like Meta, Microsoft also predicts that capital expenditure in the fourth quarter of this year will be higher than that in the third quarter. Institutions estimate that Microsoft's capital expenditure this year and next year will reach 28.6 billion and 30.3 billion US dollars, an annual increase of 4% and 6% respectively.
The agency said that Meta and Microsoft's capital expenditures increased in the fourth quarter, in line with the recent optimistic view of downstream server foundries on the momentum of orders in the fourth quarter. Meta's capital expenditure is expected to increase by 12% year-on-year next year, which may alleviate the market's fear that the demand for cloud servers may decrease by a double-digit percentage year-on-year next year, driving the confidence of the supply chain to recover.
