Key Takeaways
- Meta delivered Q1 2026 earnings per share of $10.44, crushing the $6.67 consensus forecast
- Quarterly revenue reached $56.3 billion, representing 33% year-over-year growth
- 2026 capital expenditure forecast increased to $125B–$145B range from previous $115B–$135B guidance
- Shares declined approximately 8% during premarket hours following the earnings announcement
- The company paused share repurchases this quarter after spending roughly $13B on buybacks in 2025
Meta Platforms delivered impressive first-quarter results, yet investors responded with a sharp selloff. Shares plunged roughly 8% in premarket trading Thursday following the social media giant’s decision to significantly increase its capital spending projections for the year.
The financial performance itself was undeniably solid. The company reported earnings of $10.44 per share against revenue totaling $56.31 billion. Analyst consensus had called for $6.65 per share on $55.52 billion in sales. Year-over-year revenue growth clocked in at an impressive 33%.
However, context matters. The earnings figure benefited significantly from an $8.03 billion tax credit. Excluding this one-time advantage, adjusted earnings per share landed at $7.31 — comfortably beating forecasts, but painting a more modest success story than the raw data suggests.
The market’s negative reaction centered on capital expenditure projections. Meta revised its 2026 spending outlook to a range of $125 billion to $145 billion, up considerably from its earlier $115 billion to $135 billion forecast. This pushes the midpoint from $125 billion to $135 billion.
The company attributed the elevated spending to rising component costs and expanded data center construction requirements. Prior to the earnings release, The Wall Street Journal reported that Meta had been extending server equipment lifespans due to constraints in memory chip availability.
Rising Investments Strain Cash Generation
The expanded capital allocation is putting pressure on free cash flow generation. Additionally, Meta abstained from any share buyback activity during the quarter. This marks a significant departure from 2025, when the company allocated nearly $13 billion toward stock repurchases.
Truist Securities analyst Youssef Squali said 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.”
User metrics showed continued expansion. Meta’s suite of applications averaged 3.56 billion daily active users in March, marking 4% growth compared to the prior year. A modest sequential decline occurred, which Meta explained was due to internet connectivity issues in Iran and WhatsApp access restrictions in Russia.
Advertising metrics demonstrated particular strength. The platform served 19% more advertisements to users while simultaneously achieving 12% higher pricing. This dual expansion signals that Meta’s artificial intelligence-powered engagement and ad targeting systems are generating tangible returns.
CEO Perspective
CEO Mark Zuckerberg characterized the period as a “milestone quarter,” highlighting robust application engagement and the debut model from Meta Superintelligence Labs.
The company maintained its full-year operating expense guidance of $162 billion to $169 billion. For the second quarter of 2026, Meta projected revenue between $58 billion and $61 billion — with the midpoint of $59.5 billion falling marginally below Wall Street’s $59.6 billion expectation.
Meta also cautioned about continuing legal and regulatory challenges across the European Union and United States that could impact business operations and financial performance.
The Q2 revenue guidance midpoint of $59.5 billion trails consensus estimates by a narrow margin.
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