META Q1 2026: Record Revenue, 7% Stock Dive on $145B Spending Shock

Meta Platforms beat Q1 2026 earnings with $56.3B in revenue, yet shares fell 7% after-hours as the company raised its 2026 AI capex forecast to as high as $145 billion.

Meta Platforms reported first-quarter 2026 results on Wednesday, April 29, delivering its fastest revenue growth since 2021 — but the headline numbers were immediately overshadowed by a dramatically escalated AI spending outlook that sent shares tumbling roughly 7% in after-hours trading. The social media giant posted revenue of $56.31 billion, a 33% year-over-year jump from $42.3 billion, while adjusted earnings per share came in at $7.31 against analyst estimates of $6.79 — both clear beats — yet the market's focus locked squarely onto a $145 billion capital expenditure ceiling that Wall Street had not fully priced in.

A Beat That the Market Chose to Penalize

The magnitude of Meta's top-line outperformance was substantial by any conventional measure. Revenue cleared the $55.45 billion consensus estimate by nearly $900 million, and net income climbed to $26.8 billion, or $10.44 per diluted share, from $16.6 billion, or $6.43 per share, a year earlier. The quarterly profit figure included an $8.03 billion income tax benefit tied to the Trump administration's tax and spending bill; excluding that one-time adjustment, diluted EPS stood at $7.31. Ad impressions across Meta's family of apps — Facebook, Instagram, WhatsApp, and Threads — rose 19% year-over-year, while the average price per ad climbed 12%, both metrics accelerating versus the fourth quarter of 2025.

For Q2 2026, Meta guided revenue in a range of $58 billion to $61 billion, bracketing the $59.5 billion analyst consensus and implying roughly 25% year-over-year growth at the midpoint. Average revenue per person came in at $15.66, topping the $15.26 estimate, even as the sequential drop from $16.56 in Q4 reflected typical seasonal patterns.

The $145 Billion Capex Wall

The central flashpoint of the earnings release was a revised full-year capital expenditure forecast of $125 billion to $145 billion — a $10 billion increase on both ends of the prior guidance range of $115 billion to $135 billion. Meta attributed the upward revision to "higher component pricing" driven in part by geopolitical supply-chain disruptions linked to the ongoing U.S.-Iran conflict, as well as "additional data center costs to support future year capacity." First-quarter capex came in at $19.84 billion, well below the StreetAccount average estimate of $27.57 billion, suggesting the bulk of spending will be back-half weighted — a dynamic that amplified market unease about the full-year trajectory.

To contextualize the scale, Meta spent $72.2 billion on capex in all of 2025 and guided for total expenses that year of $113 billion to $118 billion. The 2026 total expense range of $162 billion to $169 billion represents a roughly 40% surge year-over-year, underscoring just how aggressively CEO Mark Zuckerberg is betting on artificial intelligence infrastructure as the defining competitive battleground.

Users Miss as Iran Disruptions Bite

Beyond spending, the user growth miss added to selling pressure. Meta's daily active people metric, which aggregates users across all its platforms, registered 3.56 billion in Q1 2026 — a 4% increase from the prior year but a quarter-over-quarter decline from 3.58 billion and notably below the 3.62 billion Wall Street projection. Meta cited two geopolitical factors: internet disruptions in Iran resulting from the ongoing U.S.-Iran military conflict that began in late February, and WhatsApp access restrictions in Russia. The company is the first of the major hyperscalers — alongside Alphabet, Amazon, and Microsoft, which all reported the same evening — to explicitly quantify the user impact of the Iran conflict on its platform metrics.

Zuckerberg's AI Pivot and Workforce Cuts

Even as capital expenditures surge toward a potential $145 billion, Meta is simultaneously compressing its human headcount. The company's workforce stood at 77,986 as of March 31, a 1% year-over-year increase — but layoffs announced just days prior to the earnings report will sharply reverse that trend. On April 23, Meta disclosed plans to eliminate approximately 8,000 jobs, representing about 10% of its total workforce, while simultaneously closing 6,000 open positions. Those moves follow a January reduction in Meta's Reality Labs division and a March round targeting hundreds in Facebook, global operations, and sales functions.

The workforce reduction is framed by Zuckerberg as a prerequisite to funding the AI buildout without proportionally expanding overall expense. Earlier this month, the company debuted Muse Spark, described as its first proprietary foundation model, developed through Meta Superintelligence Labs — the unit formed following the landmark $14.3 billion investment in Scale AI and the hiring of Scale CEO Alexandr Wang in June 2025. "We had a milestone quarter with strong momentum across our apps and the release of our first model from Meta Superintelligence Labs," Zuckerberg said in a prepared statement. "We're on track to deliver personal superintelligence to billions of people."

Market Context and Broader Tech Landscape

Meta's after-hours selloff unfolded against a broader big tech earnings cycle in which the same geopolitical and cost pressures are reshaping AI infrastructure spending across all hyperscalers. Microsoft in the same session called for $190 billion in 2026 capital spending citing surging memory prices. The Nasdaq Composite had gained 14% in April through Wednesday's close — its best monthly performance since April 2020 — before Meta's extended-hours drop tested sentiment heading into the final day of the month.

Youth safety litigation also resurfaced as a risk factor, with Meta acknowledging that multiple active legal cases "may ultimately result in a material loss" following two trial losses in March involving allegations that the company misled consumers about product harms.

With Q2 guidance in line with consensus and the AI advertising flywheel visibly accelerating — revenue up 33%, the fastest pace in nearly five years — Meta's fundamental business performance remains robust. The market's verdict on April 30, however, will turn on whether an annual capex bill approaching $145 billion, layered atop a conflict-disrupted user base, represents a manageable price of dominance or a structural shift in the risk profile of the world's largest social media company.

Mentioned tickers: META, GOOGL, AMZN, MSFT