Meta Q1 Earnings Beat Expectations but Stock Drops on Higher AI Spending

Instagram and Facebook parent Meta Platforms Inc. posted results Wednesday for the first quarter that exceeded expectations, showing growth in earnings, but the social media giant also increased its forecasted capital expenditures for the year. The company earned $26.77 billion, or $10.44 per share, in the January-March period, up about 61% from $16.64 billion, or $6.43 per share, in the same period a year earlier. Revenue rose 33% from last year to $56.31 billion. Meta was expected to earn $6.67 per share on revenue of $55.6 billion, per the estimates of analysts surveyed by FactSet Research. “We had a milestone quarter with strong momentum across our apps and the release of our first model from Meta Superintelligence Labs,” CEO Mark Zuckerberg said in a statement. “We’re on track to deliver personal superintelligence to billions of people.” Meta expects total revenue for the second and current quarter to be in the range of $58 billion to $61 billion, compared with the average analyst estimate of $59.48 billion. The company also updated its projected capital expenditures for the year to be in the range of $125 billion to $145 billion, increased from the previously announced range of $115 billion to 4135 billion. Meta said the change reflects its expectations of higher component pricing and, “to a lesser extent,” additional data center costs. When Meta posted its initial forecast for 2026 spending at the close of last year, it said the year-over-year growth was driven by increased investment to support Meta Superintelligence Labs efforts. Since then, the company has said it is laying off about 10% of its workforce, or about 8,000 workers, as it continues to ramp up spending on artificial intelligence infrastructure and highly paid AI-expert hires. Meta ended March with nearly 78,000 workers, up 1% year over year. Meta's stock price was down more than 6% in extended trading after the numbers came out.