Meta’s Strong Earnings Ease Fears Over AI Spending Surge

Meta Platforms presented a strong Q1 earnings report on Wednesday which helped to reduce investor worries about its rising AI expenses. The Facebook parent company now expects capital expenditures to range between $64 billion and $72 billion for 2025 while the 2024 expenditure total stands at $39 billion. Meta stock increased by 5.4% during after-hours trading despite worries about advertising spending reductions because of economic uncertainty and Trump's tariffs.

The company achieved $6.43 earnings per share which exceeded analyst predictions of $5.23 while showing a significant increase from $4.71 during the previous year. The company generated $41.39 billion in advertising revenue which exceeded the predicted $40.43 billion. D.A. Davidson analyst Gil Luria observed that Meta has sufficient flexibility to increase its AI investments because ad growth exceeded market expectations in constant currency terms.

The Q2 guidance of $42.5-45.5 billion (midpoint $44 billion) exceeded the $43.8 billion consensus despite Asia-based ad spending declining because of tariff concerns. Meta's AI-driven ad optimization combined with new Threads and WhatsApp placements and its strong Q1 results positions the company to handle economic challenges while pursuing its AI development goals.