Meta Platforms Inc (NASDAQ:META, XETRA:FB2A, SIX:FB) delivered a blockbuster first quarter on Wednesday, posting revenue and earnings that handily topped Wall Street expectations, but investors were spooked by a steep increase in the company's capital expenditure outlook, sending shares down nearly 6% in after-hours trading.
The social media giant reported first-quarter revenue of $56.31 billion, up 33% year-over-year and ahead of analyst estimates ranging from $55.36 billion to $55.5 billion.
Earnings per share came in at $10.44, a 62% jump from the same period a year ago and well above the consensus estimate of $6.67. However, that figure was significantly lifted by an $8.03 billion income tax benefit, which contributed $3.13 per share to EPS.
Net income for the quarter rose 61% to $26.77 billion, while operating income climbed 30% to $22.87 billion, topping estimates of $19.4 billion. Operating margin held at 41%.
Despite the earnings beat, attention quickly shifted to Meta's higher spending plans. The company raised its full-year 2026 capital expenditure guidance to a range of $125 billion to $145 billion, up from a prior forecast of $115 billion to $135 billion and above the Street estimate of $123.1 billion. Meta attributed the increase to higher component pricing and additional data center costs required to support future-year capacity for its artificial intelligence infrastructure.
The revised range, which clears the consensus by as much as $22 billion at its upper end, unnerved investors already on edge about the scale of AI-related spending across the technology sector.
Costs and expenses for the quarter rose 35% year-over-year to $33.44 billion, outpacing revenue growth.
For the second quarter, Meta guided revenue of $58 billion to $61 billion, a range that straddles the analyst consensus of $59.5 billion, offering little reassurance to investors seeking a clear upside catalyst. Full-year total expenses guidance was left unchanged at $162 billion to $169 billion.
On the user engagement front, Meta's daily active people metric reached 3.56 billion, up 4% year-over-year. Advertising revenue grew 33% to $55.02 billion, driven by a 19% increase in ad impressions and a 12% rise in average price per ad.
Reality Labs, the division housing Meta's virtual and augmented reality ambitions, posted revenue of $402 million, down 2% year-over-year, and an operating loss of $4.03 billion — narrower than the roughly $5 billion loss analysts had anticipated.
The company generated operating cash flow of $32.23 billion and free cash flow of $12.39 billion. It ended the quarter with $81.18 billion in cash, equivalents, and marketable securities, against long-term debt of $58.75 billion.
CEO Mark Zuckerberg struck a bullish tone, calling the period a milestone quarter and pointing to the launch of the company's first model from Meta Superintelligence Labs. "We're on track to deliver personal superintelligence to billions of people," he said.