Meta Beats on Revenue and Earnings but Raises Its AI Spending Bill — Can Ads Grow Fast Enough to Cover a $145 Billion Tab?
Shares slid 6.9% to $624.98 in after-hours trading on April 29, despite what might be Meta's strongest quarter in years. The message from the market was clear: beating expectations isn't enough when you're simultaneously telling investors to expect a bigger check.
• A Blowout Quarter That Still Wasn't Enough
Meta reported Q1 revenue of $56.31 billion and diluted EPS of $10.44, with revenue up 33% year-over-year and EPS jumping 62%.
Ad impressions rose 19% while the average price per ad climbed 12% — a combination showing advertisers are both buying more and paying more. Wall Street had expected roughly $55.4 billion in revenue , so Meta comfortably cleared the bar. Yet the stock dropped anyway, because the guidance overshadowed the results.
• The Capex Bomb: A $10 Billion Raise in One Quarter
Meta now expects 2026 capital expenditures — money spent on data centers, chips, and AI infrastructure — of $125–$145 billion, up from prior guidance of $115–$135 billion. That's a $10 billion raise at both ends of the range, just three months into the year. The prior range itself was already a near-doubling from $69.69 billion spent in 2025. For shareholders, every extra dollar of capex is a dollar not flowing back as profit or buybacks in the near term. Free cash flow already fell 19% to $43.59 billion in 2025 , and this raise puts further pressure on that figure.
• The Ad Engine Is Working — But It's Funding an Enormous Construction Project
Revenue, net income, and EPS all rose strongly, yet management reaffirmed full-year expenses of $162–$169 billion while raising the capex outlook — meaning the spending increase is going straight into building AI infrastructure, not into higher costs elsewhere. Meta has also been slashing headcount, laying off about 10% of its workforce, or 8,000 employees , to redirect savings toward AI.
• Strong Q2 Guidance Offers a Partial Cushion
Meta guided Q2 revenue to $58–$61 billion , signaling continued ad acceleration. But analysts had warned that a revenue beat paired with raised capex guidance could still produce a negative stock reaction — and that's exactly what happened. The Street's average price target of $855 and 61 buy ratings suggest most analysts still see long-term value, but tonight's sell-off shows investors want proof that the AI spending converts to profit — not just promises.