Meta Platforms (NASDAQ:META) shares are taking a bit of a beating in Thursday’s session, down about 8% as investors react to the company’s latest quarterly results and what they signal going forward. The social media giant delivered a strong Q1 report with beats on both revenue and earnings, but that was not enough to keep the market satisfied.
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Instead, attention has shifted to a step-up in capital expenditures, as Meta ramps spending to keep pace with other hyperscalers in the ongoing AI buildout. The company raised its 2026 capex outlook by $10 billion to a range of $125 billion–$145 billion, up from the prior $115 billion–$135 billion, and CEO Mark Zuckerberg’s lack of clear detail around the AI strategy did little to ease concerns about whether that elevated spending will ultimately deliver the expected returns.
Still, the quarter was far from weak. Advertising remained a clear bright spot, with revenue climbing 29% year over year on the back of stronger engagement, higher impressions, and a growing user base. Management also pointed to early traction from generative AI tools, which are starting to gain adoption among advertisers and could open the door to further monetization. At the same time, progress in Meta’s Superintelligence Labs, including momentum following the Muse Spark launch, is showing up in rising Meta AI usage, with sessions per user moving higher and hinting at a broader push into personal agents.
Yet, the cost side is hard to ignore. Total expenses jumped 35% year over year, driven by infrastructure investments and higher compensation, and management kept its full-year 2026 expense outlook intact despite plans to reduce headcount by around 10%. Reality Labs remains a drag, posting roughly $4 billion in operating losses in Q1, although those losses are starting to narrow and are being partially offset by revenue tied to AI-powered wearables.
Over the near term, Goldman Sachs analyst Eric Sheridan thinks investors are likely to remain focused on whether Meta can translate its AI investments into tangible returns, while also sustaining strong revenue growth, operating margins, and free cash flow to justify the “depth & duration of the investment cycle.” Longer term, the analyst notes that management remains centered on advancing core growth drivers at the intersection of AI and spatial computing across the Family of Apps, new standalone apps, and the broader Reality Labs ecosystem, while continuing to build out a “world-class compute infrastructure.”
More to the point, Sheridan isn’t backing off his bullish stance. “We continue to frame META as well-positioned against several long-term secular growth themes and are encouraged by the positive momentum across key product initiatives including Reels, click-to-messaging Ads, and AI including Advantage+ adoption of advertising budgets,” the analyst summed up.
To this end, Sheridan assigns META a Buy rating, while his $830 price target implies the stock will gain 35% over the coming months. (To watch Sheridan’s track record, click here)
Most analysts also remain META bulls. The stock claims a Strong Buy consensus rating, based on a mix of 31 Buys and 7 Holds. At $826.66, the average price target offers one-year upside of 34%. (See Meta stock forecast)
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.