Meta Beats Q1 Earnings but Stock Drops 7% on Capex Hike
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- Meta reported Q1 CY2026 revenue of $56.31 billion, beating analyst estimates of $55.55 billion with 33.1% year-on-year growth and a 1.4% beat
- Meta's GAAP EPS of $10.44 exceeded analyst consensus of $6.66 by 56.8%, while Q2 revenue was guided to approximately $59.5 billion at the midpoint, roughly in line with Wall Street expectations
- Meta raised its full-year capex guidance to $135 billion, up from $125 billion previously, and free cash flow margin slipped to 22% from 23.5% in the prior quarter
- Daily Active People reached 3.56 billion, adding 130 million year-on-year but still missing expectations, a contrast to ARPU growth of 28.2% year-on-year to $15.82
- Meta's stock dropped 7.1% to $625.87 immediately after reporting, with the market focusing on the capex increase and the user miss rather than the revenue and EPS beats
- Mark Zuckerberg called it a "milestone quarter," citing momentum across the company's apps and the first model release from Meta Superintelligence Labs
Why it matters: Meta delivered a clean double-beat on revenue and EPS but the $10 billion capex increase signals aggressive AI infrastructure spending is now cutting into cash generation, and with the stock shedding 7.1% in a single session, investors are repricing the cost of staying competitive in the AI race against the near-term earnings beat.
