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This Month's Featured News
Meta Posted Its Best Sales Growth Since 2021—So Why Did Shares Fall?By Leo Miller. Published: 4/30/2026. 
Key Points
- Meta Q1 2026 earnings saw the company post its highest growth in over four years, and came with a large earnings per share beat.
- However, increased capital expenditure guidance overshadowed these strong results.
- While Muse Spark gets Meta back into the AI model conversation, the company has yet to flesh out monetization specifics.
- Special Report: Elon Musk’s $1 Quadrillion AI IPO
On a day when several Magnificent Seven companies reported earnings, Meta Platforms (NASDAQ: META) appeared to get the short end of the stick. Alongside Meta, Google parent Alphabet (NASDAQ: GOOGL), Amazon.com (NASDAQ: AMZN), and Microsoft (NASDAQ: MSFT) reported earnings on April 29. Among that group, Meta was the only company that saw a steep decline in after-hours trading.
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Still, Meta’s results were strong: it beat estimates on both revenue and earnings and provided guidance in line with expectations. However, consistent with a theme among hyperscalers, investors reacted negatively to the company’s higher forecast for artificial intelligence (AI) spending. Meta Beats on Revenue and Earnings, Posting 33% GrowthIn Q1 2026, Meta reported revenue of $56.31 billion, up 33% year over year. That figure was near the top end of the company’s guidance of $56.5 billion and ahead of analysts’ $55.36 billion estimate. Adjusted earnings per share (EPS) came in at $10.44, a 62% year-over-year increase and well above expectations of $6.67. Much of that beat reflected an $8.03 billion income tax benefit recognized in the quarter. Meta noted that excluding the tax benefit, EPS would have been $7.31 — still a meaningful beat of analysts’ $6.67 forecast and roughly 14% year-over-year growth. The company also held operating margin steady at 41%, unchanged from Q4 2025 and well above analyst expectations near 35%. Meta left its full-year expense guidance unchanged, however, suggesting margin pressure could appear later in the year. For the next quarter, Meta expects revenue between $58 billion and $61 billion. The midpoint of $59.5 billion implies about 25% growth, in line with consensus estimates. Most underlying metrics were healthy. Daily active people (DAP) — users who used a Meta app at least once per day — rose 4% year over year, the company’s smallest DAP increase in at least five years; Meta attributed the slower growth in part to disruptions in Iran and Russia. Ad impressions grew 19% year over year, the strongest pace for that metric since Q1 2024, while average price per ad rose 12%, its largest increase since Q4 2024. CapEx Guidance Weighs on Shares After-HoursMeta raised its capital expenditure (CapEx) guidance to a range of $125 billion to $145 billion for full-year 2026, up from its prior range of $115 billion to $135 billion. Using midpoints, the company’s CapEx guidance increased from $125 billion to $135 billion — an 8% rise. Meta shares fell roughly 7% in after-hours trading. Given the company’s top- and bottom-line beats, the elevated CapEx outlook likely drove the sell-off. Higher CapEx among hyperscalers raises investor concern because it increases the bar for achieving attractive returns on AI investments. Meta said the higher guidance “reflects our expectations for higher component pricing this year and, to a lesser extent, additional data center costs to support future year capacity.” The comment indicates the increase stems primarily from suppliers charging more for components, with added data center capacity a secondary factor. Higher component prices mean Meta must pay more to obtain the same capacity it previously planned for, which can further pressure returns on AI spending. Meta Keeps AI Product Details Under Wraps Despite Muse Spark ReleaseDetails about the company’s new Muse Spark model and the products it will power were limited. CEO Mark Zuckerberg said, “Now that we have a strong model, we can develop more novel products as well,” but the company did not outline specific product plans or monetization timelines. That lack of clarity may have contributed to the stock’s decline. AI revenue at Google, Amazon, and Microsoft is more clearly defined through cloud spending and AI subscriptions, while to date Meta’s AI gains have been primarily embedded within a strengthening advertising business. Still, Muse Spark is very recent — Meta released the model about three weeks ago. It will likely take time to see how its AI product lineup and monetization evolve. In the meantime, the advertising engine remains a core strength: the company’s 33% revenue growth is its highest since Q4 2021 and more than double the 16% growth reported in Q1 2025. |
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