Key Highlights
- META shares plummeted over 10% following first-quarter 2026 results, erasing approximately $175 billion in shareholder value
- Quarterly revenue reached $56.31 billion, representing a 33% year-over-year increase — the company’s best performance since 2021
- The social media giant increased its 2026 capital expenditure forecast to a range of $125–$145 billion, revised upward from $115–$135 billion
- Wall Street firm JPMorgan shifted its stance on META to Neutral from Overweight, slashing its target price to $725 from $825
- Platform engagement showed 3.56 billion daily active users, falling short of analyst expectations at 3.62 billion
On April 29, 2026, Meta Platforms delivered what appeared to be an exceptionally strong quarterly performance, yet shares tumbled more than 10% in the following trading session. The stock was hovering near $610 at the time of publication, representing a steep decline from pre-earnings levels above $700.
The tech giant posted quarterly revenue of $56.31 billion, marking a robust 33% climb compared to the same period last year. This performance represents the company’s most impressive quarterly expansion rate since 2021. Meta reported net income of $26.8 billion, translating to $10.44 per diluted share, although this figure incorporated an $8.03 billion one-time tax benefit related to U.S. Treasury research and development guidance.
When adjusting for that exceptional tax windfall, the profitability metrics remain healthy — simply less spectacular than the reported headline figures.
Advertising impressions climbed 19% on a year-over-year basis. The platform now counts over 4 million advertisers utilizing at least one of Meta’s generative AI creative tools. The company’s Family daily active people metric registered 3.56 billion, falling below the Street’s consensus forecast of 3.62 billion users.
Meta management attributed the user shortfall to internet service interruptions in Iran and regulatory restrictions on WhatsApp in Russia.
Wall Street’s Top Bull Reverses Course
The catalyst that most unsettled investors wasn’t the modest user growth disappointment — it was the unexpected downgrade from JPMorgan.
Doug Anmuth, an analyst who had been among Meta’s most vocal supporters on Wall Street, shifted his rating to Neutral from Overweight and reduced his price objective to $725 from $825 on April 30.
The downgrade stemmed from Meta’s revised capital spending outlook. The company elevated its full-year expenditure projection to $125–$145 billion, up from a previous range of $115–$135 billion. This marks the second straight upward adjustment. Meta’s initial 2026 capex forecast, established in January, stood at $115–$135 billion.
First-quarter capital expenditures totaled $19.8 billion, jumping 47% year over year. CFO Susan Li cited elevated memory chip costs and expanded data center infrastructure as primary factors.
Anmuth’s apprehension doesn’t stem from the spending magnitude itself. His concern centers on the potential return on investment. “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 in his research note.
His projections suggest Meta’s capital spending will escalate to $202 billion in 2027, producing negative free cash flow of $4 billion in 2026 and $24 billion in 2027.
The AI Investment Strategy
Meta’s artificial intelligence initiative focuses on proprietary large language models, extensive data center expansion, and its recently unveiled Muse Spark model — the inaugural release from its superintelligence research division.
Daily engagement with Meta AI glasses surged threefold year over year during Q1. The Reality Labs division 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,” but emphasized that the pathway from this capital deployment to non-advertising revenue streams remains ambiguous.
The majority of Wall Street analysts declined to mirror JPMorgan’s rating change. Firms including Barclays, Cantor Fitzgerald, and TD Cowen reduced their price targets while preserving constructive ratings.
Anmuth additionally highlighted two upcoming obstacles for the second quarter: more difficult year-over-year revenue comparisons and the implementation of European Limited Privacy Advertisements, anticipated to create revenue headwinds beginning in Q2.
JPMorgan’s revised $725 price target suggests approximately 8% appreciation potential from present trading levels.
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