I am fairly new to investing (3–4 years). Most of my portfolio has consisted of semiconductor and Mag7 stocks, but recently, I have started to scrutinize the balance sheets of these companies.
One company that caught my attention is Meta. The business model is shifting from an asset light software company with ad revenue to a capital intensive utility company. They are making heavy AI capital expenditures without a clear use case. In a recent statement, they announced plans to spend even more and rent compute power. However, data center CapEx is not a one-time expense; all of these chips and memory components need to be periodically updated and maintained so they do not become architecturally obsolete(maintenance capex)
I believe they need to be updated every three years.
What is your viewpoint? What should be the maintenance capex compared to the setup cost?