Meta Platforms (+6.30%) expands AI integration and beats market consensus 🖋️📄

Meta Platforms (META.US) is up 6.30% in pre-market trading following quarterly earnings release. The company posted a better-than-expected Q1 report and offered optimistic guidance based on rapidly growing investments in artificial intelligence infrastructure.

Earnings summary:

• Revenue: $42.31 billion, up 16% y/y; operating margin 41%, earnings per share (EPS) $6.43
• Advertising segment: Ad impressions up 5%, average price per ad up 10%, lifting ad revenue to around $41.4 billion
• User numbers: Daily active users of the app family (Facebook, Instagram, WhatsApp, Messenger) reached 3.43 billion – up 6%
• Cash generation: Free cash flow of $10.3 billion; cash and cash equivalents and marketable securities totaled $70.2 billion
• Costs and capex: Total expenses were $24.76 billion (+9% y/y); quarterly capex $13.69 billion. Updated capex forecast for 2025: $64–72 billion (raised)
• Headcount: 76,834 employees, up 11% vs. a year ago
• Outlook: Q2 2025 revenue expected at $42.5–45.5 billion (≈1% FX tailwind); full-year operating expenses lowered to $113–118 billion

Management commentary

CEO Mark Zuckerberg told investors that the past quarter highlighted “five main opportunities” related to AI: more effective advertising, better recommendation algorithms, advanced business messaging, the Meta AI assistant, and AI-powered devices. He pointed to a 5% increase in ad conversions on Reels thanks to a new recommendation model, a 30% increase in advertisers testing generative tools, and continued growth of the Threads app, which surpassed 350 million monthly active users. Engagement on Facebook and Instagram rose by 7% and 6% respectively — which management attributes largely to AI-driven ranking systems.

CFO Susan Li emphasized the company’s financial flexibility and readiness to spend aggressively where needed. Meta now plans capital expenditures of $64–72 billion in 2025, up from the previous target of $60–65 billion, due to accelerated data center buildouts and network hardware upgrades to support larger generative models. Despite this, full-year operating expense guidance was lowered by around $1 billion to a range of $113–118 billion, partly due to reduced hiring plans.

AI product development

AI-related product updates also dominated the press conference. A day before earnings, Meta launched a standalone mobile Meta AI app, based on the new Llama 4 large language model. Zuckerberg said nearly one billion people are already using Meta AI in some capacity — from searches in WhatsApp to smart Ray-Ban glasses, whose sales have tripled year-over-year. The top priority for the coming quarters is to deepen engagement rather than immediate monetization.

Potential risks

Not everything looks perfect, however. The European Commission recently ruled that the "ad-free subscription" option violates the Digital Markets Act (DMA). The company warned that the required changes could “significantly worsen” user experience in Europe and may start negatively impacting revenue in the region as early as Q3, even though the decision will be appealed.

Meta D1 interval

Investors welcomed the report with optimism, as confirmed by the company’s pre-market stock price. Meta is up 6.30% to $583 per share. Investor enthusiasm stems from the effective use of innovative AI analytics in the company’s core business. Meta ends Q1 with momentum across nearly every front and a clear message: AI is not an add-on to the business — it is the core.

Source: xStation 5