Meta Stock Drops 8% As Soaring Capex Overshadows Earnings Beat

TLDR

• Meta beat Q1 2026 earnings expectations with EPS of $10.44 vs. $6.67 estimate
• Revenue hit $56.3 billion, up 33% year-over-year
• Capex guidance raised to $125B–$145B for 2026, up from $115B–$135B
• Stock fell around 8% in premarket trading despite the earnings beat
• Meta did not buy back any stock this quarter; last year it spent nearly $13B on repurchases

Meta Platforms posted a strong first quarter but the market wasn’t impressed. The stock dropped around 8% in premarket trade on Thursday after the company raised its capital expenditure guidance for the year.

Meta Platforms, Inc., META

The numbers themselves were hard to argue with. Meta earned $10.44 per share on revenue of $56.31 billion. Wall Street had expected $6.65 per share on $55.52 billion in revenue. Revenue was up 33% compared to the same quarter last year.

It’s worth noting that earnings got a boost from an $8.03 billion income tax benefit. Strip that out, and adjusted EPS comes in at $7.31 — still well ahead of estimates, but a different picture than the headline number.

The real story for investors was the capex guidance. Meta now expects to spend between $125 billion and $145 billion in 2026, up from a prior range of $115 billion to $135 billion. The midpoint lands at $135 billion, compared to $125 billion previously.

Meta pointed to higher component prices and data center buildout costs as the reasons for the increase. The Wall Street Journal had reported ahead of earnings that Meta was extending the life of some server equipment due to a memory chip shortage.

Capex Pressure Hits Free Cash Flow

The higher spending is squeezing free cash flow. Meta also chose not to repurchase any stock during the quarter. That’s a notable shift — the company spent nearly $13 billion on buybacks in 2025.

On the user side, Meta’s family of apps averaged 3.56 billion daily users in March, up 4% year-over-year. The number did dip slightly quarter-over-quarter, which Meta attributed to internet disruptions in Iran and restricted WhatsApp access in Russia.

Ad performance was a bright spot. Meta showed users 19% more ads and managed to raise ad prices by 12% at the same time. That combination points to its AI-driven engagement and targeting tools starting to pay off.

What Zuckerberg Said

Mark Zuckerberg called it a “milestone quarter,” citing strong app momentum and the release of the first model from Meta Superintelligence Labs.

Full-year expenses are still expected to come in at $162 billion to $169 billion. For Q2 2026, Meta guided for revenue of $58 billion to $61 billion — the midpoint of that range came in just slightly below the Street’s $59.6 billion estimate.

Meta also flagged ongoing legal and regulatory headwinds in both the EU and the US as potential risks to its business and financial results.

Q2 revenue guidance midpoint sits at $59.5 billion, just a hair under consensus.

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