Published: Wednesday, April 29, 2026 · 11:33 PM | Updated: Wednesday, April 29, 2026 · 11:33 PM
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Meta Platforms on Wednesday evening reported a truly impressive first quarter, but the stock sank on the one metric that mattered most to Wall Street. Revenue in the first quarter rose 33% year over year to $56.3 billion, crushing the LSEG-compiled analyst consensus estimate of $55.45 billion. Notably, this was the strongest revenue growth for Meta in 5 years. Adjusted earnings per share increased 62% to $10.44, significantly ahead of the $6.79 expected, according to LSEG. META YTD mountain Meta Platforms YTD Nonetheless, higher capital expenditure guidance knocked Meta shares down roughly 6.5% in after-hours trading. The stock had been making a comeback, but a loss of this magnitude by Thursday’s close would knock it back into the red year to date. Bottom line Coming into the print, it was first-quarter spending and spending guidance that had investors on the edge of their seats. Capex in Q1 came in below expectations — clearly a positive, however, investors want to see where the puck is going, not where it’s been. And, unfortunately, chasing the holy grail of technology, artificial intelligence, is going to cost more than previously expected. While reaffirming full-year total expense guidance, it raised the outlook for the capital expenditures part by $10 billion at the midpoint, with much of that increase attributable to higher component costs, particularly the rise in memory costs. That might have been forgivable, considering Meta’s strong quarterly revenue, margins, EPS, and operating cash flow that AI investments to date have helped to deliver. But, a 5% quarter-over-quarter slide in daily active people (DAP) in its Family of Apps unit — which includes Facebook, Instagram, Messenger, and WhatsApp — was a step too far. Even a nearly 4% year-over-year DAP increase to 3.56 billion was little consolation. On the call, CEO Mark Zuckerberg said, “We saw a small decrease in total family dailies due to internet outages in Iran and blocks in Russia, but otherwise trends across our apps are strong. Daily and monthly actives on Instagram and Facebook continue to grow with video driving all-time high engagement across both apps.” CFO Susan Li noted that absent these headwinds, Family DAP would have been higher than the 3.58 billion we saw last quarter. Though we understand the desire by some to sell the stock after hours, we think that is short-sighted. Yes, the increased capex guidance hurts, and the hit to DAPs resulting from the conflicts involving Iran and Russia certainly don’t help. However, we think strong user monetization, cash generation, and operating income results serve to justify the outlays. The caveat, and why we think Meta is reacting so much worse than Alphabet, even as both dominate the advertising space and both increased capex guidance, is that of the four mega caps that reported Wednesday night, Meta is the one that lacks a public cloud offering. As a result, Meta’s spending is more about internal needs than a desire to build out capacity to then turn around and rent to others. Therefore, because the return on this spend is about Meta’s own demand, and not about the demand of everyone else that names like Microsoft, Alphabet, and Amazon can turn around and sell to, the spending gets more heavily scrutinized. If demand from one of Alphabet’s customers wanes, it has others that can sop up the capacity. If demand for Meta products wanes, however, it doesn’t have the business in place to simply rent out the capacity to other existing customers, for their own non-Meta needs. On the call, Li said, “We’re also signing cloud deals that will come online over the course of this year and 2027, allowing us to scale more quickly. These multi-year cloud deals and our infrastructure purchase agreements drove a $107 billion step up in our contractual commitments this quarter. Our investments will support our training needs for future models, and most importantly, provide us with the inference capacity necessary to deliver personal and business agents to billions of people around the world, along with several other AI product experiences we’re developing.” As a result, we’re reiterating our buy-equivalent 1 rating . That said, understanding that investors are clearly taking issue with Meta’s levels of spend, a factor that will cap upside until there is more clarity on engagement and revenue opportunities that these massive levels of spend are yielding, we are trimming our price target to $750 from $825. Along with Meta, our three other hyperscalers — Alphabet , Amazon , and Microsoft — reported quarterly results Wednesday evening. Commentary Global average price per ad increased 12% year over year, even as strong impression growth, including in lower monetizing regions, held back the growth. The number of daily AI glasses users more than tripled year over year. Other revenue in the Faily of Apps segment (non-advertising) jumped 74% year over year, driven largely by paid messaging and subscriptions revenue for WhatsApp. Ranking improvements made in the first quarter resulted in a 10% increase in Reels time spent on Instagram. Total video time watched on Facebook increased by more than 8% globally, the largest sequential increase in four years. In the U.S. and Canada specifically, the ranking improvements drove a 9% increase in video time watched on Facebook in the first quarter. More than 500 million users across Facebook and Instagram are now watching AI-translated videos every week. Businesses are increasingly leaning on Meta’s AI offerings to help with their own customer engagement. In fact, between WhatsApp and Messenger, more than 10 million conversations are being handled by business AIs every week, a 10 times increase versus where we started the year! Why we own it Meta Platforms is dominant in the world of targeted digital advertising with excellent technology. Strong user engagement makes its platforms great places for ads. Meta’s scale provides the financial power and attracts the talent needed to pursue growth avenues such as artificial intelligence. Competitors : Alphabet , TikTok, and Snap Weight in portfolio : 4.47% Most recent buy : Nov. 10, 2025 Initiated : May 29, 2014 Guidance Meta projected current (second) quarter revenue of between $58 billion and $61 billion, right in line with the consensus estimate, at the midpoint, according to LSEG. For full-year 2026, the team reiterated guidance for total expenses to be between $162 billion and $169 billion, still materially above the $160 billion analyst estimate. Capital expenditures for the full year are now expected to be between $125 billion and $145 billion, an increase from the prior range of between $115 billion and $135 billions, and above the $122.64 billion expected, even on the low end, according to FactSet. (Jim Cramer’s Charitable Trust is long META. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. 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