On Wednesday, local time, after the U.S. stock market closed, Facebook parent company Meta Platforms (META) released its first-quarter 2026 earnings report. Although the performance exceeded market expectations, the company significantly increased its full-year capital expenditure forecast. Combined with multiple factors such as mounting legal and regulatory pressures and uncertain prospects for artificial intelligence investments, the stock fell sharply in after-hours trading, highlighting market concerns over its aggressive AI strategy.
The earnings report showed that Meta achieved first-quarter revenue of $56.31 billion, a year-over-year increase of 33%, surpassing market expectations of $55.45 billion. The company expects second-quarter revenue to be between $58 billion and $61 billion, generally in line with forecasts. Net profit was recorded at $26.8 billion, a sharp rise from the $16.6 billion in the same period last year. However, this figure includes a one-time, non-cash income tax benefit of $8 billion recognized due to the implementation of U.S. tax policies. Excluding this factor, analysts had expected net profit of approximately $17.2 billion. Adjusted earnings per share reached $7.31, higher than the average analyst estimate of $6.79.
However, a concern emerged in the “Family Daily Active People” metric, which measures the average number of daily users who open any one of its apps. This metric stood at 3.56 billion in the first quarter. Although it increased 4% year-over-year, it declined more than 5% quarter-over-quarter, falling short of Wall Street expectations of 3.62 billion. Meta attributed this to internet disruptions in Iran and restrictions on access to WhatsApp in Russia, stating that this marks the first sequential decline since the metric was publicly disclosed.
What truly shook the market was Meta’s substantially increased spending plan. The company raised its full-year 2026 capital expenditure forecast from the previous range of $115 billion to $135 billion to a new range of $125 billion to $145 billion, representing an approximate 8% increase at the midpoint, far exceeding analyst expectations. Chief Financial Officer Susan Li explained that the higher spending was mainly due to rising component prices and additional costs for new data centers. However, investors were clearly not persuaded, and Meta’s stock plunged nearly 7% in after-hours trading, nearly erasing all of its gains since the beginning of the year.
Meta CEO Mark Zuckerberg had previously stated that the company would invest hundreds of billions of dollars in AI infrastructure by the end of this decade. Currently, Meta has signed hardware and chip purchase agreements worth billions of dollars with companies such as Nvidia (NVDA), AMD (AMD), and Broadcom (AVGO), and is building multiple large-scale data centers to support its AI strategy. Analysts pointed out that the higher spending raises the stakes. Since Meta relies on its own proprietary AI systems and still lags behind frontier labs, engagement with its standalone AI applications trails that of its competitors.
To cope with the immense pressure of AI-related spending, Meta has recently advanced cost-reduction plans simultaneously. Last week, the company notified employees in an internal memo that it would lay off approximately 8,000 people and cancel recruitment for 6,000 vacant positions. However, compared to the billion-dollar AI investments, the savings remain a drop in the bucket. During a conference call, Zuckerberg stated that the company is leveraging AI to improve efficiency and revealed that Meta is collaborating with Broadcom to deploy over one gigawatt of its own custom chips, while also deploying a large number of AMD chips.
