$Meta Stock Takes A Hard Hit...

$META Platforms shares fell roughly 8% in Thursday's session, trading near $614 in early trading on April 30, after the social media giant delivered a Q1 earnings beat that was quickly overshadowed by a sharply higher capital expenditure commitment. The sell-off wiped a significant portion of the company's market capitalisation in a single session.

Meta reported Q1 2026 earnings and raised its full-year 2026 capital expenditure guidance to $125 billion to $145 billion, up from a previous range of $115 billion to $135 billion. The company told investors the increase was driven by higher component prices and additional data centre costs — and is now guiding to nearly double what it spent in 2025, more than its combined spend across 2024 and 2025.

A Strong Quarter That Markets Chose to Ignore

Meta posted a 33% jump in first-quarter revenue to $56.31 billion, with net income up 61% to $26.77 billion. Diluted EPS hit $10.44, boosted by an $8.03 billion one-time tax benefit. Operating margin held at 41%, even as costs and expenses climbed 35% to $33.44 billion.

Despite those headline numbers, the forward spending picture rattled investors. The raised capex guidance implies that a substantial portion of record profits will be reinvested immediately, pressuring near-term free cash flow. Meta's Q1 capex alone hit $18.99 billion — a 47% year-over-year jump — and this marks the second consecutive upward guidance reset since January, when the original range of $115 billion to $135 billion was already considered aggressive.

AI Costs Mount as ROI Remains Unclear

CFO Susan Li said the updated outlook was driven primarily by higher memory prices and additional data centre costs required to support future model training and inference. CEO Mark Zuckerberg defended the strategy, pointing to what he called "a milestone quarter" and the release of Meta's first model from Meta Superintelligence Labs.

Critics are less convinced. Meta's capex intensity is now rising faster than its revenue, and the AI return on investment remains undefined. Reality Labs posted another $4.03 billion operating loss in Q1, extending cumulative losses to roughly $83 billion since 2020. Meta also announced last week that it is laying off approximately 10% of its workforce — around 8,000 employees — while freezing hiring for 6,000 open roles, a move widely seen as an attempt to offset the ballooning infrastructure bill.

One factor that may temper the bearish case: Meta is funding its entire buildout from internal cash flow, reporting $32.22 billion in Q1 operating cash flow. At roughly 22x forward earnings, the valuation leaves room for upside — but only if AI investments eventually translate into measurable revenue growth. For now, the market is focused squarely on the cost side of that equation.

Sources:
CNBC — Meta Q1 Earnings Report 2026
Fortune — Meta Bumps 2026 Capex Forecast to $145 Billion
24/7 Wall St. — Meta Tumbles 8% on $145 Billion CapEx Bombshell