Key Highlights
- META shares declined over 10% following first-quarter 2026 results, erasing approximately $175 billion in market value
- Quarterly revenue reached $56.31 billion, marking a 33% year-over-year increase — the company’s fastest growth rate since 2021
- The tech giant increased its 2026 capital expenditure forecast to a range of $125–$145 billion, elevated from the previous $115–$135 billion outlook
- JPMorgan shifted its stance on META to Neutral from Overweight, reducing the price objective to $725 from $825
- Daily active people across Meta’s family of apps totaled 3.56 billion, falling short of analyst expectations at 3.62 billion
Meta Platforms delivered impressive first-quarter results on April 29, 2026, yet witnessed shares tumble more than 10% in the following trading session. The stock exchanged hands near $610 at the time of observation, declining from pre-earnings levels exceeding $700.
Quarterly revenue totaled $56.31 billion, representing a 33% year-over-year surge. This growth rate stands as the most robust quarterly expansion the social media giant has achieved since 2021. Net income landed at $26.8 billion, translating to $10.44 per diluted share, with this figure incorporating an $8.03 billion one-time tax benefit related to U.S. Treasury R&D guidance.
Excluding this one-time benefit reveals underlying earnings performance that remains robust, though less spectacular than the headline figure suggests.
Advertising impressions increased 19% compared to the prior year. The platform now counts over 4 million advertisers utilizing at least one of Meta’s generative AI creative tools. Family daily active people across all properties reached 3.56 billion, falling short of the Street’s 3.62 billion consensus.
The company cited internet connectivity issues in Iran and WhatsApp service limitations in Russia as contributing factors to the user shortfall.
JPMorgan Reverses Its Bullish Stance
The development that sent the biggest shockwave through the market came from JPMorgan’s research desk.
Doug Anmuth, a lead analyst who had maintained one of the Street’s most optimistic views on Meta, downgraded shares to Neutral from Overweight while slashing his price objective to $725 from $825 on April 30.
The catalyst behind this shift centered on Meta’s revised capital spending outlook. The company elevated its full-year capex projection to $125–$145 billion, increased from the prior $115–$135 billion range. This marks the second straight upward adjustment. Meta’s initial 2026 capex guidance, announced in January, stood at $115–$135 billion.
First-quarter capital expenditures alone totaled $19.8 billion, climbing 47% year over year. CFO Susan Li identified elevated memory-chip pricing and expanded data center investments as primary drivers.
Anmuth’s apprehension extends beyond the spending magnitude to focus on expected returns. “We believe full-stack AI competition is intensifying and Meta has a more challenging path to returns on heavy AI capex beyond advertising,” he stated.
His projections indicate Meta’s capital spending will expand to $202 billion in 2027, producing negative free cash flow of $4 billion in 2026 and $24 billion in 2027.
Capital Allocation Breakdown
Meta’s artificial intelligence strategy encompasses proprietary large language models, data center expansion, and the recently unveiled Muse Spark model — the inaugural release from its superintelligence research division.
Daily engagement with Meta AI glasses tripled year over year during Q1. Reality Labs recorded an operating loss of $4.03 billion for the quarter.
Anmuth recognized Muse Spark as “the first step towards Meta’s goal of pushing the frontier and delivering personal superintelligence to billions of users,” while noting that the pathway from this investment to non-advertising revenue streams remains ambiguous.
The majority of Wall Street analysts chose a different path than JPMorgan. Barclays, Cantor Fitzgerald, and TD Cowen all reduced price targets while preserving their positive ratings.
Anmuth also identified two upcoming challenges for Q2: more difficult year-over-year revenue comparisons and the implementation of European Limited Privacy Advertisements, which is anticipated to create revenue pressure beginning in the second quarter.
JPMorgan’s revised $725 price target suggests approximately 8% upside potential from current trading levels.
