Meta Earnings: Revenue Beat, Stock Drop on Spending Concerns | META Stock News

Meta Platforms reported first-quarter earnings that exceeded analyst expectations on Wednesday, but shares fell in after-hours trading as the company increased its capital expenditure forecast for the year, signaling a continued heavy investment in artificial intelligence. The company’s earnings per share (EPS) came in at $10.44, significantly higher than the $8.15 expected by analysts polled by Bloomberg, and revenue reached $56.31 billion, surpassing the estimated $55.5 billion.

Despite the positive earnings report, Meta’s stock was down approximately 6% in after-hours trading, driven by the revised capital expenditure (capex) guidance. The company now anticipates capex spending between $125 billion and $145 billion for 2026, an increase from its previous forecast of $115 billion to $135 billion. This increase reflects expectations for higher component pricing and additional data center costs to support future AI capacity, according to a company statement.

AI Investment Drives Spending Increase

Meta’s commitment to AI is evident in the increased spending, following a $14.3 billion investment in Scale AI and the hiring of CEO Alexandr Wang in June 2025. While these investments have yet to translate into new revenue streams, they have strengthened the company’s core advertising business, contributing to the 33% revenue climb from $42.3 billion a year earlier – marking the fastest quarterly growth since 2021.

Chief Executive Officer Mark Zuckerberg has spearheaded the company’s deeper push into AI, initiating a strategy shift and talent overhaul. The increased capex guidance underscores the company’s dedication to this strategy, even as overall expenses are expected to remain relatively stable, ranging from $162 billion to $169 billion for the year. This stability is partially attributed to a recent decision to cut approximately 10% of the company’s staff.

User Growth Impacted by Global Disruptions

However, Meta’s user growth experienced a setback in the first quarter. Daily active people (DAP) reached 3.56 billion, a 4% increase year-over-year, but a more than 5% decrease from the fourth quarter. This decline fell short of Wall Street’s projection of 3.62 billion. The company attributed the drop, in part, to “internet disruptions in Iran” and “a restriction on access to WhatsApp in Russia.”

“Internet disruptions in Iran” weighed on user growth.

Meta Platforms

The company did not elaborate on the nature or extent of the disruptions in Iran, but the impact on user numbers highlights the challenges Meta faces in navigating geopolitical instability and varying levels of internet access globally.

Financial Highlights and Outlook

Beyond the headline numbers, Meta’s first-quarter performance revealed several key financial details. Excluding an $8 billion one-time tax benefit, earnings per share would have been $7.31. The company anticipates revenue for the current quarter to fall between $58 billion and $61 billion.

Despite the market’s immediate reaction to the increased capex forecast, analysts remain cautiously optimistic about Meta’s long-term prospects. The company’s focus on AI is seen as a crucial step in maintaining its competitive edge in the rapidly evolving digital landscape. However, the success of this strategy will depend on Meta’s ability to effectively monetize its AI investments and navigate the challenges posed by global disruptions and regulatory scrutiny.

Meta also flagged potential legal scrutiny in its earnings release, though details were not immediately available. This adds another layer of uncertainty for investors as they assess the company’s future performance.