Meta just posted one of the best quarters in Big Tech history and got punished for it. Q1 revenue hit $56.3 billion (up 33%), ad impressions grew 19%, and operating income rose 30% to $22.9 billion on a 41% operating margin. The stock dropped ~9% the next morning.
The reason? Zuckerberg raised Meta’s 2026 capital spending guidance to $125-145 billion, up $10 billion on both ends from January - more than Meta spent in all of 2024 and 2025 combined. The money is going to AI infrastructure, and it’s already showing up in the numbers: Meta AI has over 1 billion monthly users, ad creative tool adoption doubled year-over-year, and the AI-powered ranking model lifted ad conversions 1.6% in Q1 alone.
But not everything is accelerating. Daily active users across Meta’s apps declined for the first time ever (down slightly to 3.56 billion), Reality Labs burned another $4 billion in a single quarter, and when an analyst asked Zuckerberg what ROI signs he’s watching for on the spending, he dodged: “That’s a very technical question.”
Here's how the community voted
Q1 revenue grew 33% to $56.3B with a 41% operating margin, ad impressions up 19%, and average price per ad up 12%. Q2 guidance of $58-61B implies continued acceleration. Meta’s ad engine is the strongest in digital advertising and AI is making it measurably better, with the adaptive ranking model improving off-site conversions by 1.6% in Q1 alone.
Meta AI has surpassed 1 billion monthly active users, making it the fastest-growing AI platform in history. Reels time spent rose 10% in Q1 from ranking improvements, and AI creative tools saw adoption double year-over-year among advertisers. The AI spending is not speculative - it is directly powering the ad business that just grew 33%.
Analysts rate the stock Strong Buy with an average price target of ~$834, roughly 34% above the post-earnings price of ~$622. Free cash flow was $12.4B in Q1 despite the capex ramp, and the forward P/E of ~23x is below the five-year average for a business growing revenue at 33%.
Meta raised 2026 capex guidance to $125-145 billion, more than it spent in 2024 and 2025 combined. The increase was driven partly by higher component prices, not just strategic expansion. At the midpoint, Meta is spending $135B on infrastructure while Q1 revenue annualizes to roughly $225B, and any slowdown in ad growth would make that ratio look dangerous.
Daily active users across Meta’s family of apps declined for the first time ever in Q1, dropping from 3.58B to 3.56B quarter-over-quarter. Reality Labs lost another $4 billion on just $402 million in revenue, bringing cumulative losses past $83 billion since 2021. The metaverse bet continues to burn cash with no clear path to profitability.
The AI capex arms race is industrywide and has no guaranteed winners. Microsoft and Alphabet both raised spending guidance the same week, and Amazon held its $200B target steady. Meta’s moat is its ad data, not its AI models, and competitors like Google and TikTok are making the same AI-powered ad improvements. Spending the most does not guarantee winning the most.
Q1 revenue grew 33% to $56.3B with a 41% operating margin, ad impressions up 19%, and average price per ad up 12%. Q2 guidance of $58-61B implies continued acceleration. Meta’s ad engine is the strongest in digital advertising and AI is making it measurably better, with the adaptive ranking model improving off-site conversions by 1.6% in Q1 alone.
Meta AI has surpassed 1 billion monthly active users, making it the fastest-growing AI platform in history. Reels time spent rose 10% in Q1 from ranking improvements, and AI creative tools saw adoption double year-over-year among advertisers. The AI spending is not speculative - it is directly powering the ad business that just grew 33%.
Analysts rate the stock Strong Buy with an average price target of ~$834, roughly 34% above the post-earnings price of ~$622. Free cash flow was $12.4B in Q1 despite the capex ramp, and the forward P/E of ~23x is below the five-year average for a business growing revenue at 33%.
Meta raised 2026 capex guidance to $125-145 billion, more than it spent in 2024 and 2025 combined. The increase was driven partly by higher component prices, not just strategic expansion. At the midpoint, Meta is spending $135B on infrastructure while Q1 revenue annualizes to roughly $225B, and any slowdown in ad growth would make that ratio look dangerous.
Daily active users across Meta’s family of apps declined for the first time ever in Q1, dropping from 3.58B to 3.56B quarter-over-quarter. Reality Labs lost another $4 billion on just $402 million in revenue, bringing cumulative losses past $83 billion since 2021. The metaverse bet continues to burn cash with no clear path to profitability.
The AI capex arms race is industrywide and has no guaranteed winners. Microsoft and Alphabet both raised spending guidance the same week, and Amazon held its $200B target steady. Meta’s moat is its ad data, not its AI models, and competitors like Google and TikTok are making the same AI-powered ad improvements. Spending the most does not guarantee winning the most.
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Meta has "half the planet" as active users, which is truly insane, and their ad business is obviously going well with so many users. But where are they true leaders today (besides Instagram and WhatsApp which both have fierce competition) and what are their major bets which can lead to a bright future? I don't see any.