Shares Drop Despite Strong Revenue Growth
Meta shares fell about 7% in extended trading on Wednesday after the company reported lower than expected capital expenditures and missed Wall Street forecasts for user growth. The reaction showed that investors remain focused not only on earnings, but also on the pace of artificial intelligence spending and engagement across Meta’s platforms.
The company reported adjusted earnings per share of 7.31 dollars, above analyst expectations of 6.79 dollars, according to LSEG. Revenue reached 56.31 billion dollars, also ahead of the 55.45 billion dollars expected by analysts.
AI Helps Strengthen The Advertising Core
Revenue rose 33% from 42.3 billion dollars a year earlier, marking Meta’s fastest quarterly growth since 2021. The performance reflects chief executive Mark Zuckerberg’s aggressive focus on artificial intelligence, which has not yet created major new revenue streams but has helped improve the company’s core advertising business.
Zuckerberg has spent recent months deepening Meta’s AI strategy after a shift that included a 14.3 billion dollar investment in Scale AI and the hiring of its chief executive, Alexandr Wang. The company is working to position AI as a central driver of product development, ad targeting and future monetization.
User Growth Misses Expectations
Meta reported first quarter daily active people of 3.56 billion, up 4% from a year earlier but down more than 5% from the fourth quarter. Analysts had expected daily active people to reach 3.62 billion.
The company attributed part of the quarter over quarter decline to internet disruptions in Iran and restrictions on access to WhatsApp in Russia. These factors highlighted how geopolitical events and access limitations can affect engagement metrics for global platforms.
Capex Comes In Low, But Outlook Rises
Capital expenditures totaled 19.84 billion dollars in the first quarter, below the 27.57 billion dollar average estimate from StreetAccount. However, Meta raised its full year capex forecast to a range of 125 billion to 145 billion dollars, up from its previous outlook of 115 billion to 135 billion dollars.
The company said the higher forecast reflects expectations for increased component prices this year and additional data center costs to support future capacity. The guidance reinforces investor concerns that AI infrastructure spending will remain elevated as Meta builds the computing power needed for advanced models and services.
Profit Rises With Help From Tax Benefit
Net income climbed to 26.8 billion dollars, or 10.44 dollars per share, from 16.6 billion dollars, or 6.43 dollars per share, a year earlier. The profit increase included an 8.03 billion dollar income tax benefit tied to an adjustment connected to the Trump administration’s tax and spending bill.
Meta said diluted earnings per share would have been 3.13 dollars lower without the tax benefit. Average revenue per person reached 15.66 dollars in the first quarter, above the 15.26 dollars expected by analysts, but below the 16.56 dollars recorded in the fourth quarter.
Legal And Workforce Risks Remain
Meta forecast second quarter revenue between 58 billion and 61 billion dollars, broadly in line with expectations for 59.5 billion dollars. At the midpoint, that would represent growth of about 25%, suggesting continued strength despite concerns around user growth and rising infrastructure costs.
The company also warned that multiple youth safety related legal cases may ultimately result in a material loss. At the same time, Meta is reducing headcount while expanding AI spending. It had 77,986 employees as of March 31, up 1% year over year, but recently announced plans to cut about 10% of its workforce and leave 6,000 open roles unfilled. Investors will now look for clearer evidence that Meta’s AI investments, including its Muse Spark foundation model, can translate into durable monetization.
