Meta Platforms released strong first-quarter earnings on Wednesday, with both revenue and profits surpassing expectations. However, the company significantly raised its full-year capital expenditure guidance, reflecting its ongoing commitment to investing in artificial intelligence infrastructure.
In the first quarter of 2026, Meta's total revenue reached $56.311 billion (analyst consensus was $55.513 billion), representing a 33% year-over-year increase. Net profit amounted to $26.773 billion, marking a 61% year-over-year growth, including an income tax benefit of $8.03 billion.
Meta set its second-quarter revenue guidance range at $58 billion to $61 billion (analyst consensus was $59.56 billion) and raised its full-year capital expenditure forecast to $125 billion to $145 billion, up from the previous guidance of $115 billion to $135 billion.
The company attributed the increase to higher hardware component prices this year and additional data center costs required to support future capacity. This signals that Meta’s AI investment cycle is still accelerating, with capital expenditures expected to remain elevated in the short term.
CEO Zuckerberg stated that Meta had completed a 'milestone' quarter, with strong momentum across its applications and the release of its first model by the Meta Super Intelligence Lab. 'We are on track to deliver personal superintelligence to billions of people.'
Following the earnings report release, Meta's after-hours trading price on the US stock market dropped by 7%, with overnight trading falling over 6%.
Revenue and profit both achieved robust growth.
In the first quarter of 2026, Meta's total revenue reached $56.311 billion, representing a 33% year-over-year increase; excluding foreign exchange impacts, the year-over-year growth rate was 29%.
By business segment, Family of Apps revenue was $55.909 billion, with advertising revenue at $55.024 billion, up 33% year-over-year. Reality Labs revenue was $402 million, showing a slight year-over-year decline.
Operating profit reached $22.872 billion, up 30% year-over-year, with an operating margin of 41%, unchanged from the same period last year.
Net profit reached 26.773 billion US dollars, a year-on-year increase of 61%, with diluted earnings per share at 10.44 US dollars.
Notably, the significant jump in net profit was due to the company recognizing an income tax benefit of 8.03 billion US dollars in the first quarter. This benefit stemmed from the treatment outlined in Notice 2026-7 issued by the US Department of the Treasury regarding previously capitalized US R&D expenses in the calculation of the corporate alternative minimum tax.
Excluding this tax benefit, diluted earnings per share would be 3.13 US dollars lower, and the actual effective tax rate would be 37 percentage points higher.
Capital Expenditure and Cash Flow: Continued Reinvestment Pace
In the first quarter, Meta's capital expenditure (including principal repayments on finance leases) amounted to 19.84 billion US dollars, showing a substantial year-on-year increase.
Operating cash flow was 32.226 billion US dollars, and free cash flow was 12.386 billion US dollars. As of March 31, the company held a total of 81.18 billion US dollars in cash, cash equivalents, and marketable securities.
The upward revision of the full-year capital expenditure guidance indicates that Meta's actual investments in AI and data center infrastructure this year will significantly exceed initial expectations. This will further compress free cash flow space, and investors need to monitor its potential impact on the pace of shareholder returns.
This quarter, Meta paid out 1.346 billion US dollars in dividends and dividend-equivalent payments, with no repurchase of Class A common stock conducted in the first quarter.
To offset expenditures in the artificial intelligence field, Meta has recently implemented a series of cost-cutting measures. Last week, the company announced plans to lay off approximately 8,000 employees and not fill 6,000 vacant positions.
Evercore ISI estimates that the layoffs in May will save the company about 3 billion US dollars annually. Additionally, the company will increasingly rely on AI agents to perform tasks that previously required human labor. However, 3 billion US dollars represents only a small fraction of Meta’s total investment in the artificial intelligence sector.
Advertising business shows an increase in both volume and price, with robust daily active user scale.
In the first quarter, the daily active users (DAP) of Meta's family of applications reached 3.56 billion, a year-on-year increase of 4%, but slightly declined from the previous quarter.
The company attributed the quarter-on-quarter decline to two external factors: internet disruptions in Iran and restrictions on WhatsApp access in Russia.
The advertising business demonstrated growth in both volume and price: ad impressions increased by 19% year-on-year, and the average price per ad rose by 12% year-on-year, jointly driving a 33% year-on-year increase in overall advertising revenue.
Full-year expense guidance remains unchanged, while legal risks remain a potential variable.
Meta maintained its full-year total expense guidance for 2026 unchanged, within the range of $162 billion to $169 billion, and projected that the full-year operating profit would exceed the 2025 level.
Regarding tax rates, the company expects the effective tax rate for the remaining quarters of 2026 to be between 13% and 16%.
The company also noted that it is closely monitoring various legal and regulatory risks, including adverse developments in both the EU and the US, which could significantly impact its business and financial performance.
Specifically, Meta stated that scrutiny surrounding issues related to adolescents continues, with multiple trials expected to take place in the US this year, potentially leading to substantial losses. This risk exposure represents a significant source of uncertainty in the company’s future performance forecasts.
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