Meta Platforms Inc., the parent company of Facebook, has delivered robust first-quarter earnings, reassuring investors despite the company’s plans to significantly ramp up its spending on artificial intelligence. The tech giant announced it now expects to spend between $64 billion and $72 billion on capital expenditures this year, an increase from its previous projection of $60 billion to $65 billion. This follows a $39 billion capex spend in the previous year.
The rise in spending sparked initial concerns, particularly as broader economic factors—such as slowing growth and rising tariffs—cast doubt on whether such investments are sustainable. Yet Meta’s earnings report quelled many of those worries. Shares rose 5.4% in after-hours trading following the announcement, signaling investor confidence fueled by the company’s strong financial results.
Meta Platforms posted earnings per share of $6.43, beating analysts’ expectations of $5.23 and showing significant growth from $4.71 a year earlier. Advertising revenue reached $41.39 billion, surpassing forecasts of $40.43 billion. The company’s ad performance, in particular, provided critical assurance that its rising AI investment is backed by solid income.
Ad Growth and AI Synergy Bolster Meta’s Position
Analysts noted that advertising revenue growth was especially impressive when adjusted for currency fluctuations. Gil Luria, head of technology research at D.A. Davidson, remarked that this stronger-than-expected ad performance provided Meta with “necessary leeway” to justify higher capital expenditures. Without such growth, the increased spending may have sparked greater concern.
Meta platforms executives defended the expanded capex outlook, emphasizing the company’s goal of becoming a leader in AI technologies. They said the investment is essential to meet growing internal demand for computing power and to improve the company’s core services. Meta believes AI will play a crucial role in enhancing its advertising business and supporting future innovation.
Unlike Alphabet Inc., which opted to maintain its $75 billion capital expenditure forecast, Meta’s willingness to increase its investment shows its confidence in the returns AI could deliver. The company is not only using AI to develop new technologies but also to optimize its advertising platform—helping advertisers better target users and improve conversion rates.
Strategic Shifts and Outlook for the Second Quarter
Despite some softening in ad spending from Asia-based clients, reportedly due to tariff concerns, Meta remains optimistic about the future. The company issued a second-quarter revenue forecast of $42.5 billion to $45.5 billion. The midpoint of this range—$44 billion—exceeds analyst expectations of $43.8 billion, suggesting continued strength in its business outlook.
In a strategic move to offset potential advertising slowdowns, Meta platforms has also expanded the reach of its ads. New ad placements on platforms like Instagram’s Threads and WhatsApp aim to diversify revenue streams and maintain advertiser engagement. This expansion aligns with Meta’s long-term strategy to deepen integration across its family of apps and further leverage AI for personalization and performance.
In summary, Meta’s exceptional first-quarter earnings have reassured investors that its aggressive AI investment strategy is grounded in real growth. With continued advancements and revenue diversification, the company appears well-positioned to weather economic headwinds and shape the future of digital advertising.
