Meta Platforms (META -4.13%) stock cratered following the company's third-quarter report that was released on Oct. 26, 2022, as it became evident that the social media giant is unlikely to come out of its slump anytime soon.

The massive decline in Meta's margins thanks to shrinking revenue and rising costs led investors to press the panic button hard following the company's results, sending the stock down more than 20%. However, Meta's bad report also contained a boon for Nvidia (NVDA -10.01%) investors. Shares of the semiconductor giant gained after Meta revealed it is going to ramp up capital spending next year.

Let's check if Nvidia investors are right about celebrating Meta's plan to boost capex in 2023.

Meta Platforms is going to ramp up spending on artificial intelligence in 2023

Meta Platforms CFO Dave Wehner pointed out on the latest earnings conference call that the company's 2023 capital expenditures could range between $34 billion and $39 billion. The midpoint of that range -- $36.5 billion -- points toward an increase of 12% from 2022's estimated capital expenditure of $32.5 billion.

Wehner also added, "An increase in AI capacity is driving substantially all of our capital expenditure growth in 2023." The Facebook parent's plan to enhance artificial intelligence (AI) spending next year rubbed off positively on Nvidia stock. That's not surprising as Nvidia's chips have been playing a key role in driving Meta's AI ambitions.

In January 2022, Nvidia revealed that Meta has chosen Nvidia's chips to train AI models in the AI Research SuperCluster (RSC) supercomputer. Nvidia provided more than 6,000 of its A100 data center GPUs (graphics processing units) to Meta for AI RSC, a number that's expected to go up to 16,000 by the end of the year.

It is worth noting that this was the second time Meta chose Nvidia's chips to power its AI research infrastructure. The social media giant selected Nvidia's chips in its first-generation AI infrastructure back in 2017 when it used 22,000 V100 GPUs to train AI models. Nvidia claims that the new supercomputer is going to be 20 times faster while running computer vision jobs and three times faster when running natural language processing models as compared to the first-generation infrastructure.

What's more, Meta intends to enhance its data center capacity in 2023. All these bode well for Nvidia given its tight relationship with Meta in AI and data centers. For instance, Meta announced a new AI platform based on Nvidia's H100 Tensor Core GPUs in mid-October.

In all, Meta's plans to increase spending on AI infrastructure in 2023 could give Nvidia's data center business a much-needed boost, especially considering the recent developments in this space.

Stimulus for Nvidia's data center business

The data center business has been one of the few bright spots for Nvidia at a time when its other key business -- video gaming -- is cracking. Nvidia's data center revenue in the second quarter of fiscal 2023 (for the three months ended July 31, 2022) jumped an impressive 61% year over year to $3.8 billion.

However, the restrictions imposed by the U.S. government on sales of data center chips to China have the potential to knock the wind out of the sails -- and sales -- of Nvidia's data center business. The company sees a $400 million hit to its data center revenue in the current quarter thanks to the restrictions. Nvidia may be able to mitigate the negative impact of the restrictions now that a key customer in the form of Meta Platforms decided to ramp up spending on data centers and AI infrastructure.

As such, Nvidia investors are right to cheer Meta's move to increase spending in 2023. However, they shouldn't forget that the weakness in the PC market could weigh on Nvidia's performance. Meta alone may not be enough to bring the semiconductor company out of its rut.

Nvidia is expected to generate $3.35 per share in adjusted earnings in fiscal 2023 compared to last year's figure of $4.44 per share. Its top line is expected to remain flat at $27 billion. So, even if Nvidia gets a nice chunk of Meta's planned capex increase of $4 billion next year, the company would need to find growth in other areas to justify its expensive valuation.

Nvidia's price-to-earnings ratio of 45 is quite high as compared to the Nasdaq 100's multiple of 23 even though the stock has slumped 55% in 2022. Given its poor growth prospects in the near term, Nvidia may not be able to justify its rich valuation despite Meta's increased spending. 

That's why savvy investors may want to wait for concrete signs of a turnaround in Nvidia's business. There may be opportunities to buy this semiconductor stock at a cheaper valuation if they want to take advantage of its lucrative long-term growth opportunities.