Meta Raises Capex Outlook, but Strong Revenue Growth Justifies the Investment
Meta Platforms Inc., the parent company of Facebook, delivered robust first-quarter earnings on Wednesday, helping ease investor concerns around its escalating spending on artificial intelligence.
The company raised its full-year capital expenditure forecast to $64 billion–$72 billion, up from a prior range of $60 billion–$65 billion. For comparison, Meta spent $39 billion on capex last year. While the revised outlook signals more aggressive investment, particularly in AI infrastructure, the market’s reaction suggests confidence in Meta’s strategy.
Shares rose 5.4% in after-hours trading, buoyed by strong financial results. Meta reported earnings per share of $6.43, significantly above the $5.23 expected and up from $4.71 a year earlier. Advertising revenue reached $41.39 billion, beating estimates of $40.43 billion.
The results contrast with Alphabet Inc., which recently held its capex guidance steady at $75 billion, highlighting a divergence in spending approaches among tech giants.
“Ad growth in the quarter was much better than anticipated, especially on a constant-currency basis,” said Gil Luria of D.A. Davidson. He added that Meta’s stronger-than-expected revenue gives it room to increase investment without rattling investors.
Meta defended its higher spending, citing the need to meet internal compute demand and its long-term goal of leading in AI development. Management also emphasized that AI is already enhancing its core advertising business.
While Meta noted weaker ad spend from Asia-based clients due to tariff concerns, its second-quarter revenue guidance remains strong at $42.5 billion to $45.5 billion, with the midpoint topping analyst expectations.
To further support ad revenue, Meta is leveraging AI to boost ad targeting and conversion rates, while expanding placements into newer platforms like Instagram’s Threads and WhatsApp — a strategy aimed at mitigating potential macroeconomic headwinds.
