Serenity: Meta has not cut capital expenditure due to "overcapacity"; computing power constraints may drive its further expansion.

Deep Tide TechFlow news: On July 01, Serenity said that market claims about Meta cutting capital expenditures due to “overbuilding” are distorted. The premise should be that it has clearly excess compute capacity, but the current situation is more like resources still being tight.

It noted that cloud computing giant Google reduced its resource allocation to Meta in March of this year because of its own computing power constraints, as Meta’s internal projects consumed a large amount of compute resources. After that, Meta may quickly have come under compute constraints and signed large-value long-term contracts with cloud compute service providers.

Serenity believes that even if Meta has some excess capacity, it is more likely to choose to sell it externally, especially when the relevant contracts have a “take-or-pay” nature. Overall, as independent compute infrastructure continues to expand, Meta’s future capital expenditure guidance may instead be raised further.