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Meta Posted Its Best Sales Growth Since 2021—So Why Did Shares Fall?Written 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 many Magnificent Seven companies reported earnings, Meta Platforms (NASDAQ: META) appeared to get the short end of the stick. Along with Meta, Google parent company 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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That said, Meta’s results were solid: the company beat sales and earnings estimates and issued guidance roughly in line with expectations. However, as has been a recurring theme with hyperscaler stocks, investors reacted negatively to Meta’s increased forecast for artificial intelligence (AI) spending. Meta Beats on Revenue and Earnings, Posting 33% GrowthIn Q1 2026, Meta reported revenue of $56.31 billion, a 33% year-over-year (YOY) increase. This was near the top end of Meta’s guidance of $56.5 billion and above the analyst consensus of $55.36 billion. Adjusted earnings per share (EPS) came in at $10.44, a 62% YOY increase. That figure was well above expectations of $6.67, but it was boosted by an $8.03 billion income tax benefit recognized during the quarter. Excluding that benefit, EPS would have been $7.31—still comfortably ahead of the $6.67 consensus and roughly 14% higher than the prior year on an adjusted basis. Meta also kept a tight lid on expenses, posting an operating margin of 41%—the same as Q4 2025—while analysts had expected the margin to fall to about 35%. The company left its full-year expense guidance unchanged, however, suggesting margin pressure could appear later in the year. For next quarter, Meta expects revenue between $58 billion and $61 billion. The midpoint of $59.5 billion implies growth of roughly 25% and aligns with analyst expectations. Key underlying metrics were mostly strong. Daily active people (DAP)—users who used a Meta app at least once per day—increased 4% YOY, the company’s lowest DAP growth in at least five years. Meta said disruptions in Iran and Russia contributed to the lower growth, which provides some context. Ad impressions rose 19% YOY, the metric’s strongest growth since Q1 2024. Meanwhile, average price per ad increased 12%, its highest gain since Q4 2024. CapEx Guidance Weighs on Shares After-HoursMeta raised its capital expenditure (CapEx) guidance to a new range of $125 billion to $145 billion for full-year 2026, up from a prior range of $115 billion to $135 billion. On a midpoint basis, CapEx guidance rose from $125 billion to $135 billion—an increase of about 8%. Shares fell roughly 7% in after-hours trading. Given that Meta beat on both the top and bottom lines, investor concern over the higher CapEx likely drove much of the sell-off. Elevated CapEx across hyperscalers is a primary investor worry because it raises 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.” That language indicates the primary driver is higher supplier prices for components, with additional data center capacity a secondary factor. Higher component costs mean Meta must pay more to obtain the same planned capacity, putting further pressure on AI investment returns. Meta Keeps AI Product Details Under Wraps Despite Muse Spark ReleaseSpecific details about the company’s new Muse Spark model and the products it might power were limited. CEO Mark Zuckerberg said, “Now that we have a strong model, we can develop more novel products as well.” However, the company did not clearly outline what those products will be. That lack of detail may have contributed to the stock decline. AI revenue from Google, Amazon, and Microsoft is more directly visible through cloud spending and model subscriptions, while Meta’s AI-related gains so far have been mostly embedded within its improving advertising business. Muse Spark is still new—the model was released about three weeks ago—so it will take time to see how Meta’s AI product lineup and monetization strategy evolve. In the near term, the company’s advertising engine remains a key strength: 33% revenue growth is Meta’s fastest pace since Q4 2021 and more than double the 16% growth it reported in Q1 2025. |
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