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The Big Four's performance diverges after results! Who is the real winner in AI?
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joined discussion · Apr 30 10:58

Despite the impressive earnings report, Meta remains in the 'wait-and-see' zone

Meta released its earnings report, made money, saw rising expenses, and its stock price fell On April 29 local time, Meta delivered a rather impressive Q1 earnings report: revenue of $56.311 billion, up 33% year-over-year; net profit of $26.773 billion, up 61%; advertising revenue of $55.024 billion, up 33%. However, after the release of this report, Meta's after-hours stock price once dropped more than 6% The reason is simple: Meta has once again raised its capital expenditure forecast for 2026 Meta now expects its 2026 capital expenditures to be between $125 billion and $145 billion, up from the previously forecast range of $115 billion to $135 billion In other words, just one quarter later, the company has increased both the upper and lower bounds of its full-year expenditure by $10 billion each In its earnings report, Meta explained that this mainly reflects expectations of 'higher component prices' this year, followed by increased data center costs to support future capacity In plain English, it means: AI will continue to burn cash, chips, servers, and data centers are getting more expensive, and Meta can't wait until demand comes to build facilities — it needs to lay the groundwork in advance AI is helping Meta make money, but it's also helping Meta spend it First, let's talk about making money. Meta's core advertising business remains incredibly strong. In the first quarter, ad revenue from the family of apps reached $55.024 billion, a year-over-year increase of 33%. Ad impressions grew by 19% year-over-year, and...
Meta released its earnings report—money was made, expenses rose, and the stock price fell.
On April 29 local time, Meta delivered a rather impressive Q1 earnings report: revenue of $56.311 billion, a 33% year-over-year increase; net profit of $26.773 billion, up 61% year-over-year; ad revenue of $55.024 billion, a 33% year-over-year increase. However, following the release of this report, Meta's after-hours stock price dropped more than 6% at one point.
The reason is simple: Meta once again raised its capital expenditure forecast for 2026.
Meta released its earnings report, made money, saw rising expenses, and its stock price fell On April 29 local time, Meta delivered a rather impressive Q1 earnings report: revenue of $56.311 billion, up 33% year-over-year; net profit of $26.773 billion, up 61%; advertising revenue of $55.024 billion, up 33%. However, after the release of this report, Meta's after-hours stock price once dropped more than 6% The reason is simple: Meta has once again raised its capital expenditure forecast for 2026 Meta now expects its 2026 capital expenditures to be between $125 billion and $145 billion, up from the previously forecast range of $115 billion to $135 billion In other words, just one quarter later, the company has increased both the upper and lower bounds of its full-year expenditure by $10 billion each In its earnings report, Meta explained that this mainly reflects expectations of 'higher component prices' this year, followed by increased data center costs to support future capacity In plain English, it means: AI will continue to burn cash, chips, servers, and data centers are getting more expensive, and Meta can't wait until demand comes to build facilities — it needs to lay the groundwork in advance AI is helping Meta make money, but it's also helping Meta spend it First, let's talk about making money. Meta's core advertising business remains incredibly strong. In the first quarter, ad revenue from the family of apps reached $55.024 billion, a year-over-year increase of 33%. Ad impressions grew by 19% year-over-year, and...
Meta now expects capital expenditures in 2026 to be between $125 billion and $145 billion, higher than the previous range of $115 billion to $135 billion.
In other words, just one quarter later, the company has increased both the upper and lower limits of its annual expenditure range by $10 billion each.
In its earnings report, Meta explained that this mainly reflects expectations of 'higher component prices' this year, followed by increased data center costs to support future capacity.
In simpler terms: AI will continue to burn cash, with chips, servers, and data centers all becoming more expensive. Moreover, Meta can't wait until demand arrives to build facilities—it needs to lay the groundwork in advance.
Meta released its earnings report, made money, saw rising expenses, and its stock price fell On April 29 local time, Meta delivered a rather impressive Q1 earnings report: revenue of $56.311 billion, up 33% year-over-year; net profit of $26.773 billion, up 61%; advertising revenue of $55.024 billion, up 33%. However, after the release of this report, Meta's after-hours stock price once dropped more than 6% The reason is simple: Meta has once again raised its capital expenditure forecast for 2026 Meta now expects its 2026 capital expenditures to be between $125 billion and $145 billion, up from the previously forecast range of $115 billion to $135 billion In other words, just one quarter later, the company has increased both the upper and lower bounds of its full-year expenditure by $10 billion each In its earnings report, Meta explained that this mainly reflects expectations of 'higher component prices' this year, followed by increased data center costs to support future capacity In plain English, it means: AI will continue to burn cash, chips, servers, and data centers are getting more expensive, and Meta can't wait until demand comes to build facilities — it needs to lay the groundwork in advance AI is helping Meta make money, but it's also helping Meta spend it First, let's talk about making money. Meta's core advertising business remains incredibly strong. In the first quarter, ad revenue from the family of apps reached $55.024 billion, a year-over-year increase of 33%. Ad impressions grew by 19% year-over-year, and...
AI is helping Meta make money, but it's also helping it spend money.
Let's start with making money.
Meta's core advertising business remains incredibly strong.
In the first quarter, the advertising revenue of its family of apps reached $55.024 billion, a year-on-year increase of 33%. Ad impressions grew by 19% year-over-year, and average ad prices increased by 12% year-over-year.
This shows that Meta’s growth isn’t solely driven by price hikes; its ad distribution, recommendation, targeting, and conversion efficiency continue to improve. Over the past few years, Meta has been using AI in its news feed recommendations, Reels distribution, ad creativity, and delivery systems, and these improvements are now reflected in its financial reports.
Now let’s talk about spending.
In the first quarter, Meta’s capital expenditures have already reached $19.84 billion. The company still holds $81.18 billion in cash, cash equivalents, and marketable securities, with free cash flow at $12.39 billion, which still looks robust. However, with an expected capital expenditure for the full year between $125 billion and $145 billion, investors’ scrutiny is understandable—how much more will the company’s AI infrastructure consume from the profits earned through its advertising business?
Meta released its earnings report, made money, saw rising expenses, and its stock price fell On April 29 local time, Meta delivered a rather impressive Q1 earnings report: revenue of $56.311 billion, up 33% year-over-year; net profit of $26.773 billion, up 61%; advertising revenue of $55.024 billion, up 33%. However, after the release of this report, Meta's after-hours stock price once dropped more than 6% The reason is simple: Meta has once again raised its capital expenditure forecast for 2026 Meta now expects its 2026 capital expenditures to be between $125 billion and $145 billion, up from the previously forecast range of $115 billion to $135 billion In other words, just one quarter later, the company has increased both the upper and lower bounds of its full-year expenditure by $10 billion each In its earnings report, Meta explained that this mainly reflects expectations of 'higher component prices' this year, followed by increased data center costs to support future capacity In plain English, it means: AI will continue to burn cash, chips, servers, and data centers are getting more expensive, and Meta can't wait until demand comes to build facilities — it needs to lay the groundwork in advance AI is helping Meta make money, but it's also helping Meta spend it First, let's talk about making money. Meta's core advertising business remains incredibly strong. In the first quarter, ad revenue from the family of apps reached $55.024 billion, a year-over-year increase of 33%. Ad impressions grew by 19% year-over-year, and...
During the earnings call, Meta's CFO Susan Li stated that the company would not provide specific expectations for 2027 capital expenditures at this time, as planning around computing capacity remains “highly dynamic.” She also noted that so far, Meta has consistently underestimated its own computing needs.
This statement is telling the market: Meta’s previous estimates were insufficient. The larger the models, the more products there are, and the more complex the ad system becomes—as well as with the advancement of AI assistants, AI glasses, AI content generation, and AI agents—the required computing power continues to expand dynamically.
Zuckerberg continued to emphasize the AI vision in the earnings report. He said that Meta achieved a milestone this quarter: its apps maintained strong momentum, and Meta Superintelligence Labs released its first model. The company is moving forward towards the goal of “bringing personal superintelligence to billions of people.”
For a long time, Meta has not been content with 'building a better chatbot,' but instead aims to integrate AI into its entire social empire.This includes Meta's social/messaging apps such as Facebook, Instagram, WhatsApp, Messenger, Threads, as well as glasses, wearable devices, and future personal AI agents. For Meta, AI is not a standalone new business but a fundamental technology that will reshape advertising, content, creative tools, social relationships, and hardware entry points.
Meta released its earnings report, made money, saw rising expenses, and its stock price fell On April 29 local time, Meta delivered a rather impressive Q1 earnings report: revenue of $56.311 billion, up 33% year-over-year; net profit of $26.773 billion, up 61%; advertising revenue of $55.024 billion, up 33%. However, after the release of this report, Meta's after-hours stock price once dropped more than 6% The reason is simple: Meta has once again raised its capital expenditure forecast for 2026 Meta now expects its 2026 capital expenditures to be between $125 billion and $145 billion, up from the previously forecast range of $115 billion to $135 billion In other words, just one quarter later, the company has increased both the upper and lower bounds of its full-year expenditure by $10 billion each In its earnings report, Meta explained that this mainly reflects expectations of 'higher component prices' this year, followed by increased data center costs to support future capacity In plain English, it means: AI will continue to burn cash, chips, servers, and data centers are getting more expensive, and Meta can't wait until demand comes to build facilities — it needs to lay the groundwork in advance AI is helping Meta make money, but it's also helping Meta spend it First, let's talk about making money. Meta's core advertising business remains incredibly strong. In the first quarter, ad revenue from the family of apps reached $55.024 billion, a year-over-year increase of 33%. Ad impressions grew by 19% year-over-year, and...
The problem is that the market is no longer satisfied with hearing this story.
In recent years, investors have rewarded Meta because the 'Year of Efficiency' has been driving up profit margins—layoffs, cost control, and cutting low-priority projects are all visible measures. However, Meta continues to make money while also significantly increasing investments at the scale of hundreds of billions of dollars.
Alphabet, which released its earnings on the same day, provided a point of comparison for Meta.
Both companies are increasing their AI-related capital expenditures, but the market reactions were completely different: Alphabet’s stock price rose, while Meta’s fell.
The key difference is that Google's AI investments have clearer commercial applications. Google Cloud reported continued strong revenue and profit growth in Q1, with enterprise AI demand, cloud orders, and proprietary chip capabilities forming a closed loop.
On Meta’s side, AI has indeed improved ad recommendations and delivery efficiency, but more investment is still directed toward future entry points like data centers, models, AI assistants, and smart glasses—high spending but relatively fewer proven revenue-generating scenarios.
By comparison, Meta remains in the 'pending zone' in the eyes of the market and must continue to prove that its increasingly expensive AI investments will eventually generate new revenue streams beyond advertising.
From this earnings report, Meta also tried to stabilize market sentiment. It maintained its full-year expense forecast for 2026 at $162 billion to $169 billion and stated that this year's operating profit is still expected to exceed that of 2025.
In other words, the company wants to convey that although capital expenditures related to AI infrastructure continue to rise, this year's routine operational expenses directly recorded on the income statement have not spiraled out of control just yet, and core operations can still generate profits.
But capital expenditure doesn't mean 'not spending money.' It simply doesn’t turn into immediate expenses all at once; instead, it first accumulates as long-term assets like servers and data centers, then gradually enters costs through depreciation over the years.
For investors, this still implies greater cash flow pressure and a heavier depreciation burden in the coming years.
Other operating data in the earnings report is also strong enough.
Meta’s revenue in the first quarter increased by 33% year-over-year. Even excluding currency impacts, it still rose by 29%. The daily active users of the family of apps reached 3.56 billion, up 4% year-over-year. The company expects total revenue for the second quarter to be between $58 billion and $61 billion.
Reality Labs remains in the red, with $402 million in revenue and an operating loss of $4.028 billion in the first quarter, though the loss narrowed slightly from $4.210 billion in the same period last year.
The significant growth in net profit requires a closer look.
Meta’s net profit in the first quarter reached $26.773 billion, with diluted earnings per share of $10.44. However, this included an $8.03 billion one-time tax benefit. Meta disclosed that excluding this tax benefit, its diluted earnings per share would decrease by $3.13. In other words, while profit performance was indeed robust, the apparent year-over-year increase was also magnified by tax factors.
Overall, Meta’s core business remains strong and highly profitable, and its cash flow is solid. However, the rising capital expenditures still spooked the market.
Meta is neither like OpenAI or Anthropic, which are still relying on financing to support their model competitions, nor like cloud vendors that can directly package and sell AI infrastructure to enterprise clients.
Meta's advantage lies in the sheer scale of its advertising machine, but this is also its weakness. The return on its AI investments must ultimately reflect in ad efficiency, user engagement time, new hardware access points, or novel commercialization scenarios; otherwise, even the grandest 'personal superintelligence' narrative will face skepticism.
In the short term, the answer has yet to emerge.
What Meta can currently demonstrate is that AI has made its ad system more profitable; however, it has yet to prove whether the next round of AI investment can cultivate a new revenue stream comparable in scale to its advertising business.
This earnings report has become the most direct illustration of the challenges Meta faces. While AI is raising Meta’s revenue ceiling, it is also increasing its capital expenditures. For Zuckerberg, this may be the ticket to the next platform; for investors, it feels more like a continuously escalating bill. $Meta Platforms (META.US)$$GraniteShares 2x Long META Daily ETF (FBL.US)$$Virtual Reality (LIST2139.US)$$META MEDIA (00072.HK)$$Artificial Intelligence (LIST2136.US)$$Artificial Intelligence (LIST23586.HK)$$Technology (LIST20763.US)$$Star Tech Companies (LIST2518.US)$
Risk Disclaimer: The above content only represents the author's view. It does not represent any position or investment advice of Futu. Futu makes no representation or warranty.Read more
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