- Meta‘s strong Q1 2026 earnings were overshadowed by a higher 2026 capex forecast, causing its stock to drop over 7% in after-hours trading on April 29.
- The company now expects to spend between $125 billion and $145 billion on capital expenditures this year, nearly double its 2025 spending.
- Analysts expressed skepticism about the return on this massive AI and infrastructure investment, questioning the company’s cash burn.
- Despite a one-time tax benefit, the core business showed strength with ad impressions up 19% and Family of Apps operating income at $26.9 billion.
Meta reported stellar first-quarter 2026 earnings on April 29, yet its stock price plummeted more than 7% in after-hours trading as detailed in its earnings announcement. The social media giant saw revenue soar 33% year-over-year to $56.31 billion, while earnings per share jumped to $10.44.
However, the company’s future guidance spooked the market by raising its full-year capital expenditure forecast to a range of $125 billion to $145 billion. Melissa Otto, head of Visible Alpha Research at S&P Global, directly linked the stock drop to this “capex revision.”
Consequently, investors questioned the return on this massive investment in AI and data centers. Otto pointedly asked, “what is the real ROI on all this capex that they’re spending,” highlighting community frustration with cash burn according to reports.
Meanwhile, segment results revealed the core Family of Apps business generated $26.9 billion in operating income with a 41% margin. The Reality Labs division, however, continued its losses with a $4 billion operating deficit for the quarter.
CFO Susan Li noted that excluding an $8.03 billion one-time tax benefit, net income would have been $18.7 billion. She attributed higher costs to infrastructure depreciation, cloud spend, and compensation for AI talent hires.
CEO Mark Zuckerberg remained optimistic, stating the company is “on track to deliver personal superintelligence to billions of people.” His technical answer about measuring AI progress, however, did little to reassure the market.
The company aims to offset some costs with layoffs of 8,000 employees and a hiring freeze for 6,000 roles. Estimated annual savings of $3 billion, however, pale against the potential $145 billion capex budget.
✅ Follow BITNEWSBOT on Telegram, Facebook, LinkedIn, X.com, and Google News for instant updates.
