Meta earnings recap: Stock tumbles 6% as capex spending expected to reach new heights

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Meta's earnings delivered a familiar message to investors: Expect capex spending to balloon to new heights as the company sprints full tilt in the AI race.

The company delivered a beat for the first quarter, with revenue of $56.3 billion that topped Wall Street estimates, and earnings per share of $10.44 that handily surpassed expectations.

But the stock tumbled 6% after hours following the results as the company disclosed it was raising its full-year guidance for capital expenditures by $10 billion to $125 to $145 billion for 2026.

"This reflects our expectations for higher component pricing this year and, to a lesser extent, additional data center costs to support future year capacity," CFO Susan Li said in Meta's release.

"Our experience so far has been that we have continued to underestimate our compute needs," the CFO said later in a call with analysts.

Meta's daily active users were up year over year but down from the most recent quarter, which the company blamed on disrupted internet access in Iran and WhatsApp restrictions in Russia.

CEO Mark Zuckerberg called Muse Spark, Meta's first model from Alexandr Wang's team, "our biggest milestone" so far this year. The company has seen double-digit increases in Meta AI sessions per user since the launch.

Discussing Meta's looming 10% layoffs planned for later in May, CFO Li said the reductions will help the company move "more quickly" and offset investments. "I think, over time, we don't really know what the optimal size of the company will be in the future," she added.

Elsewhere on the analyst call, Zuckerberg said he's "not against" building AI coding tools, but "it's not our primary focus."

Scroll on for the play-by-play of Meta's earnings release and analyst call:

The topic: Shopping products, and any learnings from Facebook's Marketplace and the potential application into future products.

While agents like OpenClaw give an "exciting glimpse" into what will be possible, Zuckerberg says, they are "rough systems" that require too much work to set up for the average person.

Meta is interested in creating agents that work "quite a bit better" and are "easy enough that people can use," he says.

"Let me put it this way: there's a lot of agents out there, right, that people are building for different things, and there aren't that many that I would want to give to my mother," he says.

"And I think getting to like that quality bar is something that I care about more than hitting a specific week for launching or something like that."

Asked about the 10 months it took Meta's Superintelligence Labs team to develop and launch Muse Spark, Zuckerberg says the results were encouraging.

"I think that that's basically the main thing that we've learned over the last quarter that I would take away is like where, you know, we started what is this pretty big bet and it's on track for our plan," the CEO says.

Meta is investing "in advance" in building leading models, before turning them into leading products, Zuckerberg says. He says he looks at building high-quality products, then scaling, then monetization.

Zuckerberg is "quite comfortable" saying that Meta Superintelligence Labs is on track to be "the leading lab in the world," he says.

Meta executives will now field questions from analysts. The stock is trading down 5.8% after hours.

CFO Susan Li is briefly addressing Meta's looming layoffs next month, which will affect around 10% of the company.

"As we grow our infrastructure spend, we remain committed to operating efficiently, and we recently shared internally that we plan to reduce the size of our employee base in May," she says.

CFO Susan Li is briefly addressing Meta's looming layoffs next month, which will affect around 10% of the company.

"As we grow our infrastructure spend, we remain committed to operating efficiently, and we recently shared internally that we plan to reduce the size of our employee base in May," she says.

Meta believes this will help it "move quickly" to offset the "substantial investments" it's making, she adds.

Compute determines the quality of Meta's services and is critical to how its employees work as they use more agents, CFO Susan Li says.

For those reasons, the company is "investing aggressively" in infrastructure, including cloud deals.

Meta expects Q2 2026 total revenue to be in the range of $58 to $61 billion.

Meta Superintelligence Labs rolled out its first product, Muse Spark, earlier this month. CFO Susan Li says the company has seen double-digit increases in Meta AI sessions per user since the launch.

Zuckerberg says his view of AI differs from that of many in the industry who warn that AI will lead to an unemployment crisis.

"I hear a lot of people out there talk about how AI is going to replace people. Instead, I think that AI is going to amplify people's ability to do what they want," he says.

Zuckerberg says his view of AI differs from that of many in the industry who warn that AI will lead to an unemployment crisis.

"I hear a lot of people out there talk about how AI is going to replace people. Instead, I think that AI is going to amplify people's ability to do what they want," he says.

"People will be more important in the future, not less," he adds.

Meta increased its capital expenditure forecast for 2026 by $10 billion. On the call, Zuckerberg says that the industry has given Meta "confidence in this investment."

He points to the memory shortage as a particular pain point and says that partnerships with Broadcom and AMD can help increase the efficiency of these expenditures.

"Now that we have a strong model, we can develop more novel products as well," the CEO says.

"Since I first wrote about our vision for personal super intelligence last year, we've been focused on delivering personal and business agents to billions of people around the world. Our goal is not just to deliver meta AI as an assistant, but to deliver agents that can understand your goals and work day and night to help you achieve them."

Meta CEO Mark Zuckerberg and CFO Susan Li are on the call and will begin by reading through prepared remarks on the quarter before a live Q&A with analysts.

"Meta predictably posted impressive growth, once again illustrating that AI continues to bolster its sprawling advertising business," wrote Minda Smiley, senior analyst at Emarketer, a sister company to Business Insider.

"Meta's ambitions in the AI race came into clearer focus with this month's release of its latest AI model, its first under revamped leadership," Smiley continued. "Yet the bigger picture is still fuzzy, as questions remain regarding how Meta plans to position the model against more established competitors, let alone monetize it. For Meta, the clock is ticking, especially considering how much money it is pouring into AI."

"Meta predictably posted impressive growth, once again illustrating that AI continues to bolster its sprawling advertising business," wrote Minda Smiley, senior analyst at Emarketer, a sister company to Business Insider.

"Meta's ambitions in the AI race came into clearer focus with this month's release of its latest AI model, its first under revamped leadership," Smiley continued. "Yet the bigger picture is still fuzzy, as questions remain regarding how Meta plans to position the model against more established competitors, let alone monetize it. For Meta, the clock is ticking, especially considering how much money it is pouring into AI."

"Even with a strong underlying business, it's clear that the company faces its fair share of lofty questions regarding its future. And as Meta officially abandons the metaverse, skeptics aren't sure if the company has what it takes to chart a fresh path forward."

An average of 3.56 billion people used Meta's family of apps — which includes Facebook, Instagram, and WhatsApp — every day in March 2026. That's up 4% year-over-year but down from the most recent December quarter, when 3.58 billion people used the apps daily.

Meta says that international political events influenced the figure. It points to disrupted internet access in Iran and WhatsApp restrictions in Russia.

Meta plans to cut 10% of its workforce, equivalent to roughly 8,000 staff, next month. In an internal memo to staff, it cited the cuts as a way to offset its other investments.

Those investments include its ballooning AI bets. In January, Meta forecast its 2026 capex to be between $115 billion and $135 billion. The dynamic means Meta is "prioritizing capital investment over human loyalty," said JP Gownder, VP principal analyst at Forrester. The company's bets on building more data centres risks "alienating the top-tier human work that took years to build," Gownder added.

Meta CEO Mark Zuckerberg

Bloomberg/Getty Images

Wedbush said it's gearing up for another strong earnings beat. In its view, investors are underestimating the "flywheel effect" of Meta's AI ad monetization, which should boost the company's profits, analysts said.

In a previous note, the firm added it was"encouraged" by Meta's cost-cutting efforts, referring to plans to trim headcount by 10%.

Wedbush said it's gearing up for another strong earnings beat. In its view, investors are underestimating the "flywheel effect" of Meta's AI ad monetization, which should boost the company's profits, analysts said.

In a previous note, the firm added it was"encouraged" by Meta's cost-cutting efforts, referring to plans to trim headcount by 10%.

"In our view, this print will reinforce that Meta is one of the cleanest AI monetization stories in Big Tech where AI capex converts directly to measurable ad revenue uplift q/q," analysts added of the outlook.

The firm reiterated its "outperform" rating and $900 price target, implying 34% upside from current levels.

Truist said it expects Meta revenue to grow 31% year over year in the first quarter, the strongest growth the company has seen since 2021.

The increase will largely be fueled by strong user growth, as well as an "improvement in monetization" as Meta integrates AI across its marketing and consumer engagement projects.

Truist said it expects Meta revenue to grow 31% year over year in the first quarter, the strongest growth the company has seen since 2021.

The increase will largely be fueled by strong user growth, as well as an "improvement in monetization" as Meta integrates AI across its marketing and consumer engagement projects.

The company also looks like it could be catching up with the LLM competition after the latest launch of Muse Spark.

"Despite near-term investor concerns over high levels of CapEx and Gemini's recent rise to the top of AI model rankings, META continues to be a key player and beneficiary of AI improvements," Truist analysts said.

Truist reiterated its "buy" rating on the stock and set a $900 price target, implying 34% upside.

Meta CEO Mark Zuckerberg

Bloomberg/Getty Images

Analysts at JPMorgan said they expect "strong" growth from the Facebook parent this year, with revenue potentially rising 30% year over year in the first quarter on "continued core AI ads improvements."

Meta's heavy spending on AI doesn't show any signs of "easing," but the company looks like it's holding down "financial guardrails," the bank said.

Analysts at JPMorgan said they expect "strong" growth from the Facebook parent this year, with revenue potentially rising 30% year over year in the first quarter on "continued core AI ads improvements."

Meta's heavy spending on AI doesn't show any signs of "easing," but the company looks like it's holding down "financial guardrails," the bank said.

"Muse Spark starts push toward frontier of personal superintelligence, but need continued progress," analysts added of the AI outlook.

The bank reiterated its "overweight" rating on Meta and issued a $825 price target, implying 23% upside from current levels.

Goldman analysts see strong growth prospects for Meta, citing checks on the company's advertising business. However, they noted that investors have "lower visibility" into the firm's outlook.

The bank said it was eyeing updated guidance for Meta's accounting expenses and total capex for the year, and expressed optimism for Muse Spark.

Goldman analysts see strong growth prospects for Meta, citing checks on the company's advertising business. However, they noted that investors have "lower visibility" into the firm's outlook.

The bank said it was eyeing updated guidance for Meta's accounting expenses and total capex for the year, and expressed optimism for Muse Spark.

"We continue to believe that, over time, the efforts tied to the Meta Superintelligence Lab has the scope for re-inserting the company into the competitive framework for (at a minimum) consumer AI adoption and possibly an extension into uses cases," the bank wrote.

Goldman reiterated its "buy" rating on Meta and issued an $840 price target, implying 25% upside from current levels.

Meta AI

Yves Herman/Reuters

BofA analysts said they are optimistic about the performance and the potential returns from Muse Spark.

"Earlier reports indicated Meta had delayed the model launch to at least May, and we think an earlier release helps clear an uncertainty overhang for the stock."

BofA analysts said they are optimistic about the performance and the potential returns from Muse Spark.

"Earlier reports indicated Meta had delayed the model launch to at least May, and we think an earlier release helps clear an uncertainty overhang for the stock."

The bank pointed to how Google saw "a meaningful improvement in sentiment" after the tech firm made progress with its Gemini 3.0 model.

"We see the current valuation as attractive given a large AI opportunity, above industry ad growth, and strong financial position for AI."

Analysts reiterated their "buy" rating on Meta and issued a price target of $885, implying 32% upside from the stock's current levels.

First quarter

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