Meta meets Q2 forecast on ad strength, beats Q1 revenue
On Wednesday, Meta Platforms exceeded analysts’ first-quarter revenue predictions and met expectations for the upcoming quarter on solid advertising performance, easing investor concerns over tariff-related economic growth. As it accelerates development of data centers that can support artificial intelligence, the Facebook and Instagram parent raised projected capital expenditures this year to strengthen and change its business. Company shares rose 5% in extended trade.
Meta increased its 2025 capital expenditure forecasts to $64–72 billion. CEO Mark Zuckerberg estimated the company may invest $65 billion this year. Meta’s biggest antitrust trial may compel Zuckerberg to sell Instagram. “The industry’s progress and our opportunities are astonishing. I want us to work aggressively and effectively and build the best infrastructure and teams “Zuckerberg told investors on a teleconference after reporting results. Meta executives stated most of the capex is going to basic business support, such as ad computing, rather than generative AI.
However, CFO Susan Li explained on the call that the expected rise represented a commitment to quickly prepare data center capacity for AI efforts and the possibility of tariffs raising hardware export costs. The increasing outlays may calm concerns that AI enthusiasm is diminishing, especially after analysts in March noted tech firms’ early withdrawal of new data center commitments.
According to LSEG data, Meta’s first-quarter sales was $42.31 billion, compared to analysts’ average forecast of $41.40 billion. Profit was $6.43 per share, exceeding projections of $5.28. Meta forecasts second-quarter revenue of $42.5 billion to $45.5 billion, compared to $44.01 billion on average. Li said the projection matched April sales trends but warned that economic uncertainty made future forecasts challenging.
Zuckerberg said Meta’s AI bets make it “well-positioned to navigate the macroeconomic uncertainty.” He stated about 1 billion people utilize Meta’s AI assistant monthly. He stated that the corporation would increase user engagement for a year before monetizing. Meta is also using AI to target ads and propose content to social media users. “If ad income continues to remain strong, then this increase in capital expenditures will be less of a hard pill for investors to chew,” said Sonata Insights founder and chief analyst Debra Aho Williamson.
Shares of AI chipmakers jumped after Meta and Microsoft posted earnings. Nvidia and AMD increased 2.7% and 1.8%, respectively. Meta’s large user base makes it a trustworthy choice for advertisers as US trade uncertainty has tightened marketing budgets and delayed campaigns. Family daily active people (DAP), which tracks unique users that access any of its apps in a day, grew 6% to 3.43 billion.
Meta makes most of its money from advertising. Leading US advertisers including Temu and Shein are significantly reducing their digital ad spending, according to industry data. Smaller rival Snap cut its second-quarter prediction a day earlier, citing economic uncertainty and the administration’s duty-free import loophole closure as reasons for its ad business’s decline. Meta’s CFO Li said Asia-based e-commerce exporters had reduced expenditure for the same reason, but April trends were good.
Meta benefits from economic uncertainty due to its reliable advertising, said Emarketer senior analyst Minda Smiley. But it “won’t be spared from a broader downturn if advertisers make substantial budget cuts and consumer spending falters,” she said. Li indicated a European regulatory battle. An EU finding that Meta violated the Digital Markets Act might hurt European company in the third quarter. Ad income in the affected regions made up 16% of Meta’s 2024 revenue, she said.
The US Federal Trade Commission is trying to undo Meta’s acquisitions of Instagram and WhatsApp in a high-stakes litigation in Washington.
