Key Takeaways
Meta Platforms Inc. (META) stock fell nearly 6% in after-hours trading after boosting its 2026 capital spending forecast for artificial intelligence, overshadowing a first-quarter revenue beat.
"The market could swing heavily as the likes of Alphabet, Amazon, Meta and Microsoft report and investors dial into CAPEX plans, free cash flow projections, and the pay-offs from AI,” Kyle Rodda, senior market analyst at Capital.com, said in a note.
The social media company reported first-quarter revenue of $56.31 billion, up 33% from the prior year and ahead of consensus estimates of around $55.6 billion. However, it also guided for 2026 capital expenditures of $115 billion to $135 billion, a near-doubling of 2025 spending.
The negative reaction signals investor concern that rising AI infrastructure costs will compress short-term profit margins, a theme dominating earnings week for Microsoft, Alphabet, and Amazon.
The spending increase is the steepest proportional step-up among the four largest tech companies reporting this week. Investors are questioning if revenue growth from new AI tools can justify the massive outlay, which for Meta now exceeds its entire 2025 operating cash flow.
The selloff puts pressure on the stock ahead of the Federal Reserve's interest rate decision, with the market weighing Meta's long-term AI ambitions against immediate profitability concerns. Investors will look for more details on the returns from AI-generated ad tools in the upcoming earnings call.
This article is for informational purposes only and does not constitute investment advice.
