META's Q1 earnings call a few hours ago was important (i listened to the whole hour)
The headline was not the $56.3B revenue or 33% growth. The bigger signal is that Meta raised 2026 capex guidance again to $125-145B from a prior $115-135B... and drove a $107 billion step-up in contractual commitments through multi-year cloud deals and infrastructure purchase agreements in a single quarter.
Management's key line, on Q&A: "we have continued to underestimate our compute needs, even as we have been ramping capacity significantly."
That was paired with explicit commentary that "most of that [capex increase] is due to higher component costs, particularly memory pricing."
The implication: capex tightness is not just a
$META story. It is a regime signal. Memory is the binding constraint of 2026, and hyperscalers are pre-paying for capacity years out because they cannot otherwise secure it.
Other signals from the call:
- Q1 capex was light at $19.8B.. well below the ~$32-36B/quarter pace implied by the FY guide. The ramp is back-half-loaded, with direct implications for H2 prints from AVGO, ANET, VRT, ETN.
- Custom silicon hit gigawatt scale: "more than one gigawatt of our own custom silicon that we're developing with Broadcom," alongside "significant amount of AMD chips to complement the new NVIDIA systems." AVGO is now a structural recipient of capex flow; AMD is a confirmed second source on merchant accelerators.
- May layoffs disclosed on the call: "We plan to reduce the size of our employee base in May." Meta is cutting opex to fund capex. That is a multi-year commitment, not a one-quarter narrative.
The bear case is execution: $125-145B capex absorption, FCF compression, and margin pressure if memory prices don't normalize.