Meta Platforms (NASDAQ: META) delivered what many are calling a blowout first-quarter earnings report on Wednesday afternoon — unless you were watching the stock price. The Facebook parent crushed revenue estimates, posted triple-digit earnings growth, and showed accelerating momentum in its advertising business. Yet shares plunged roughly 10% in after-hours trading and extended losses into Thursday's session, falling toward the $603 level as investors zeroed in on one alarming number: $145 billion.
Inside Meta's Q1 Beat: Strong Growth Across the Board
Meta reported Q1 2026 revenue of $56.3 billion, a 33% year-over-year surge that handily beat the $55.45 billion analysts had forecast. Earnings per share came in at $10.44 on a GAAP basis — well above expectations — though that figure included an $8 billion income-tax benefit. On an adjusted basis, Meta earned $7.31 per share, topping the $6.79 consensus estimate.
Operating income reached $22.9 billion, representing a robust 41% operating margin. The company's advertising business continued to fire on all cylinders, with ad revenue climbing 33% year-over-year. Meta credited AI-driven ranking improvements for lifting Reels time spent by 10% and driving double-digit gains in ad impressions, which rose 19%. Average ad prices also increased 12%, signaling strong demand for Meta's platform.
Capital expenditures for the quarter came in at $19.8 billion, slightly below analyst estimates — but the real headache was in management's forward guidance.
The $145 Billion Question: Why Meta's AI Spending Spooked the Market
Meta told investors it now expects full-year 2026 capital expenditures to land between $125 billion and $145 billion, up significantly from its prior forecast of $115 billion to $135 billion. The raised guidance represents a staggering increase from the roughly $70 billion the company spent in 2025, which itself was nearly double the prior year's figure.
The spending is being driven by two primary factors: higher memory pricing for AI chips and strategic infrastructure investments to support Meta's expanding AI ambitions. Management emphasized on the earnings call that the bulk of this investment is being directed toward core AI infrastructure — including custom MTIA (Meta Training and Inference Accelerator) chips and data center buildouts — rather than indiscriminate expansion.
But investors, already skittish about the timeline for AI returns across Big Tech, reacted with skepticism. The selloff mirrored a broader theme playing out across the tech sector: even strong earnings are being punished if they come with escalating capital spending commitments.
NBC News reported that the major U.S. stock indexes are sitting near all-time highs, but investors remain laser-focused on "delivering tangible results from elevated capital expenditures," as Chris Brigati, chief investment officer at SWBC, told the outlet.
Timeline: How the Meta Earnings Drama Unfolded
Here's a chronological look at the key events:
- April 13, 2026: Meta announces Q1 2026 earnings release date of April 29 after market close. Shares trade around $640.
- Mid-April 2026: A broader tech sector rally fueled by Iran ceasefire optimism lifts Meta shares 25% from recent lows to around $671.
- April 28, 2026 (Pre-earnings): Wall Street analysts project Meta's strongest revenue growth in five years. Consensus calls for $55.45B revenue and $6.79 adjusted EPS.
- April 29, 2026 (4:00 PM ET): Markets close with META at $669.12.
- April 29, 2026 (After close): Meta releases Q1 results — revenue of $56.3B, adjusted EPS of $7.31. Both beat estimates.
- April 29, 2026 (5:30 PM ET): Earnings call begins. Management raises 2026 CapEx guidance to $125-145B. Stock immediately drops ~8%.
- April 30, 2026 (Pre-market): Shares fall further to ~$603, down roughly 10% from the prior close.
Why Meta Stock Looks Cheap Despite the Selloff
Analysts were quick to highlight a paradox: Meta's stock is now trading at the lowest valuation multiple among the entire Magnificent Seven group, despite delivering some of the strongest earnings growth. According to Seeking Alpha analysis, Meta has grown its revenue from $197.26 billion in 2025, and its ad impressions are up 19% while ad prices rose 12% — both accelerating trends.
Meta also reported that AI-driven "business agent conversations" on its platforms have grown 10x in just four months, pointing to a potentially massive new revenue stream from AI tools that help businesses automate customer interactions.
Free cash flow remains robust despite the heavy spending, and the average analyst price target for META stock still sits at approximately $837 — implying roughly 38% upside from current levels. Out of 56 analysts tracked by Barchart, 46 rate Meta as a "Strong Buy."
"META has grown its revenue since the close of 2011 through 2025 by 5,315%," noted one Seeking Alpha contributor, arguing that the market's reaction to CapEx guidance represents "an overreaction" that creates a compelling entry point for long-term investors.
Where Things Stand Now: Meta's Position After the Selloff
As of Thursday morning, Meta shares are trading around $603, down nearly 10% from Wednesday's close of $669.12 and roughly 25% below the 52-week high of $796.25. The stock has seen significant volatility this year, fluctuating between $621 and $675 before the earnings-driven drop.
Meta's Q2 2026 revenue guidance of $58-61 billion came in relatively in line with analyst expectations, though the midpoint suggests some deceleration from Q1's torrid pace. The company also noted that foreign currency exchange rates would be an approximately 2% headwind to Q2 revenue.
Importantly, Meta's core advertising business shows no signs of slowing. The company's AI-powered recommendation engine is driving meaningful engagement gains across Facebook, Instagram, and Reels, while its business messaging platform continues to gain traction as a new monetization channel.
What Happens Next: The Road Ahead for Meta Stock
The central debate for Meta investors now comes down to a single question: Will the massive AI spending translate into proportional revenue growth? Meta is betting that its investments in large language models, recommendation systems, and AI-powered advertising tools will create a virtuous cycle of better user engagement, higher ad prices, and new revenue streams from AI agents.
Morningstar analysts noted following the report that Meta's "ad sales growth continues to accelerate even as AI costs mount," suggesting the company may be closer to demonstrating a return on its AI investments than many critics believe.
Ed Yardeni, president of Yardeni Research, told NBC News that investor concerns about "whether these companies are spending too much or if they'll ever get a proper rate of return" seem to be fading. "That seems to have gone by the wayside," he said.
For investors with a long-term horizon, the selloff may represent an opportunity to buy one of the Magnificent Seven's strongest earners at a discount — provided they have the stomach for the volatility that an AI arms race inevitably brings.
Key Takeaways for Investors
- Revenue beat: Meta posted $56.3B in Q1 2026 revenue (+33% YoY), topping the $55.45B consensus.
- EPS surprise: Adjusted EPS of $7.31 beat estimates of $6.79; GAAP EPS was $10.44.
- CapEx shock: 2026 spending guidance raised to $125-145B, up from $115-135B, triggering the selloff.
- Ad business strong: Ad revenue up 33% YoY with 19% more impressions and 12% higher prices.
- Valuation gap: Meta trades at the lowest P/E multiple in the Mag 7 despite superior earnings growth.
- Analyst consensus: Average price target of $837 suggests ~38% upside from current levels.
