Key Highlights
- Meta surpassed Q1 2026 earnings projections with EPS reaching $10.44 compared to analyst estimates of $6.67
- Quarterly revenue reached $56.3 billion, reflecting a 33% increase year-over-year
- Company elevated its 2026 capex forecast to $125B–$145B from the previous $115B–$135B range
- Shares declined approximately 8% during premarket hours following the earnings announcement
- The company suspended stock buyback activity this quarter after allocating nearly $13B to repurchases last year
Meta Platforms delivered robust first-quarter results, yet investors responded with skepticism. Shares tumbled roughly 8% in premarket activity Thursday following the company’s decision to increase its annual capital expenditure forecast.
The financial performance itself was difficult to criticize. Meta reported earnings of $10.44 per share alongside revenue of $56.31 billion. Analysts had projected $6.65 per share with $55.52 billion in revenue. Revenue climbed 33% versus the corresponding period last year.
One detail worth highlighting: the earnings figure benefited from an $8.03 billion income tax advantage. Removing that factor brings adjusted EPS to $7.31 — which still beats expectations comfortably, though it presents a more nuanced view than the initial headline figure.
The primary concern for market participants centered on capital expenditure projections. Meta revised its 2026 spending expectations to a range of $125 billion through $145 billion, elevated from the earlier $115 billion to $135 billion bracket. The new midpoint settles at $135 billion versus $125 billion previously.
Meta attributed the adjustment to rising component costs and increased expenses associated with data center construction. The Wall Street Journal reported before the earnings release that Meta had been extending server equipment lifecycles due to constraints in memory chip availability.
Free Cash Flow Faces Mounting Pressure from Capital Outlays
The expanded spending commitment is creating pressure on free cash flow metrics. Meta also refrained from executing any share repurchases during the quarter. This represents a significant change — the company allocated nearly $13 billion toward buybacks throughout 2025.
Truist Securities analyst Youssef Squali noted that Meta “continues to earn the right to invest as long as it delivers faster top line growth for longer near-term and higher free cash flows long-term.”
Regarding user metrics, Meta’s application portfolio averaged 3.56 billion daily active users throughout March, representing a 4% year-over-year increase. The figure experienced a minor sequential decline, which Meta linked to internet connectivity issues in Iran and limited WhatsApp availability in Russia.
Advertising metrics delivered encouraging signals. Meta increased ad impressions shown to users by 19% while simultaneously achieving a 12% improvement in ad pricing. This dual achievement suggests the company’s AI-powered engagement and targeting systems are beginning to generate meaningful returns.
CEO Comments on Quarterly Performance
Mark Zuckerberg characterized the period as a “milestone quarter,” highlighting robust application engagement and the debut of the inaugural model from Meta Superintelligence Labs.
Full-year operating expense projections remain within the $162 billion to $169 billion corridor. For Q2 2026, Meta provided revenue guidance ranging from $58 billion to $61 billion — with the midpoint landing marginally below Wall Street’s $59.6 billion consensus estimate.
Meta also noted continuing legal and regulatory challenges across both EU and US jurisdictions as potential factors that could impact business operations and financial performance.
The Q2 revenue guidance midpoint stands at $59.5 billion, slightly trailing analyst expectations.
