Meta reported a 33% rise in first-quarter revenue to $56.3bn ($55.4bn expected).
The number of people using at least one of Meta’s apps on a daily basis rose 4% to 3.56bn. Ad impressions rose 19%, while average price per ad rose 12%.
Operating income was up 30% to $22.9bn ($19.4bn expected), and margins were unchanged at 41%.
Free cash flow rose 20% to $12.4bn, with capital expenditure rising to $19.8bn as AI investment continues. Net debt, including operating leases, was $5.6bn.
Second-quarter 2026 revenue is expected in the range of $58-61bn. Full-year capex guidance has been raised to $125-145bn from $115-135bn.
The shares fell 6.6% in after-hours trading.
Our view
You can’t tell from the market reaction, but Meta delivered a strong quarter. Revenue growth has accelerated from 16% a year ago to 33%, driven by higher ad volumes and better pricing. Engagement across the Family of Apps stayed resilient despite regional disruption, while operating margins held firm at 41%, showing the ad engine is scaling efficiently as investment rises.
Advertising remains Meta’s engine room, with consumer touchpoints across Facebook, Instagram, WhatsApp and Threads. For advertisers, that is a treasure trove of potential customers, and AI is making it more valuable. Consumers get a better product, advertisers better returns, and Meta more pricing power.
The main investor bugbear is the scale of investment. Latest guidance took the top end of spending plans to $145bn for 2026, which we think drove the negative reaction. We didn’t share the negative view, having already pencilled in more than $140bn, and while consensus was lower, the $10bn guidance raise isn’t a major change in direction. We were also pleased to hear the CFO talk about flexibility to rein in spending if the picture changes.
We see several ways Meta can monetise the investment, from better engagement and ad performance to consumer AI, agentic shopping, AI-powered wearables and new hardware. It is not just infrastructure either. Meta has been hiring aggressively to bring top AI talent into its Superintelligence lab, where language models and products like wearables should come to life.
Crucially, the investment is focused inwards, improving Meta’s own platforms rather than building capacity for others to rent, as the cloud giants do. That makes the benefits harder to model, but also creates an opportunity for investors who believe Meta can execute.
Meta can afford the spending because its cash flows are enormous (though this will eat almost all of it this year). Costs will rise, but revenue growth at current rates should largely offset the profit impact, and we expect capex as a percentage of sales to slow next year even if the dollar amount keeps growing.
The valuation has been volatile as investors debate whether to punish or reward Meta for pushing AI investment so hard. We understand the concern, but markets look to be pricing in the cost ramp while giving little credit for potential benefits.
In our view, that creates an opportunity for Meta to outperform. The core business is firing on all cylinders, and AI should strengthen its dominance in ads and social networking. The spending plans, however, leave Meta toward the higher end of the risk curve among its tech peers, and there are ongoing regulatory/legal risks to monitor (more below).
Environmental, social and governance (ESG) risk
The technology sector is generally medium/low risk in terms of ESG, though some segments are more exposed, like Electronic Components (environmental risks) and data monetisers (social risks). Business ethics tend to be a material risk within the tech sector, ranging from anti-competitive practices to intellectual property rights. Other key risks include labour relations, data privacy, product governance and resource use.
According to Sustainalytics, Meta’s overall management of material ESG issues is average.
Meta’s dual class share structure continues to limit the influence of minority shareholders. The group also remains exposed to material regulatory and legal risks, particularly around data privacy, competition and platform safety.
There is a noteworthy business risk from the growing number of lawsuits alleging that Meta’s platforms harm children’s mental health and are designed to be addictive. These include action from 40 US states and a separate case in Canada. Meta has the financial strength to defend these claims, but large settlements, stricter regulation or required changes to algorithms and product design could weigh on costs, user engagement and advertising growth.
The author holds shares in Meta.
Meta key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.