Key Highlights
- Meta shares plummeted over 10% following Q1 2026 results, erasing approximately $175 billion from its market valuation
- Quarterly revenue reached $56.31 billion, marking a 33% year-over-year increase — the company’s fastest expansion since 2021
- Capital expenditure forecast for 2026 increased to $125–$145 billion range, up from prior guidance of $115–$135 billion
- JPMorgan shifted its rating on META from Overweight to Neutral, reducing its target price from $825 to $725
- Daily active users totaled 3.56 billion, falling short of analyst expectations of 3.62 billion
Meta Platforms delivered what appeared to be exceptional quarterly results on April 29, 2026, yet shareholders witnessed the stock crater more than 10% in the following session. Shares were changing hands near $610 at the time of publication, a significant decline from pre-earnings levels exceeding $700.
The social media giant generated $56.31 billion in revenue, representing a robust 33% year-over-year surge. This marks the company’s most impressive quarterly revenue acceleration in five years. Net income reached $26.8 billion, translating to $10.44 per diluted share, though this figure benefited from an $8.03 billion one-time tax advantage related to U.S. Treasury R&D guidance.
Excluding the tax benefit, the bottom-line performance remains robust — just not as spectacular as the initial numbers suggest.
Advertisement impressions climbed 19% compared to the prior year. More than 4 million advertisers have now adopted at least one of Meta’s generative AI creative tools. Family daily active people reached 3.56 billion, though this metric fell short of Wall Street’s 3.62 billion projection.
The company pointed to internet service disruptions in Iran and WhatsApp limitations in Russia as contributing factors to the user shortfall.
Wall Street’s Top Bull Turns Cautious
The most significant market reaction stemmed not from the user miss — but from JPMorgan’s surprising stance.
Doug Anmuth, an analyst who had been among Meta’s most vocal supporters on Wall Street, downgraded the stock from Overweight to Neutral and slashed his price objective from $825 to $725 on April 30.
The catalyst was Meta’s revised infrastructure spending outlook. The tech giant elevated its full-year capital expenditure range to $125–$145 billion, up from the previous $115–$135 billion forecast. This represents the second straight upward adjustment. Meta’s initial 2026 capex guidance, announced in January, stood at $115–$135 billion.
First-quarter capex alone registered $19.8 billion, jumping 47% year over year. CFO Susan Li cited elevated memory-chip pricing and expanded data center investments as primary factors.
Anmuth’s apprehension isn’t about the absolute spending level. It’s about the potential returns. “We believe full-stack AI competition is intensifying and Meta has a more challenging path to returns on heavy AI capex beyond advertising,” he noted in his research.
He forecasts Meta’s infrastructure spending will balloon to $202 billion in 2027, creating negative free cash flow of $4 billion in 2026 and $24 billion in 2027.
The AI Investment Strategy
Meta’s artificial intelligence initiative focuses on proprietary large language models, data center expansion, and its recently unveiled Muse Spark model — the inaugural release from its superintelligence research division.
Daily engagement with Meta AI glasses tripled year over year during Q1. Reality Labs recorded a $4.03 billion operating loss for the three-month period.
Anmuth recognized Muse Spark as “the first step towards Meta’s goal of pushing the frontier and delivering personal superintelligence to billions of users,” but emphasized that the pathway from this investment to non-advertising revenue streams remains ambiguous.
Most other Wall Street analysts didn’t mirror JPMorgan’s move. Barclays, Cantor Fitzgerald, and TD Cowen all reduced their price targets while preserving bullish ratings.
Anmuth also identified two near-term challenges for Q2: more difficult year-over-year revenue comparisons and the implementation of European Limited Privacy Advertisements, which is anticipated to pressure revenue beginning in Q2.
JPMorgan’s revised $725 price target suggests approximately 8% potential upside from current trading levels.
