TLDR
- Q1 revenue hit $42.3B, up 16% and above Wall Street’s forecast.
- Ad sales grew 16%, easing trade war and regulatory fears.
- Meta AI hit nearly 1B monthly users, fueling engagement.
- Reality Labs posted a $4.2B loss, revenue fell 6%.
- Shares surged 5.5% to $579.17, YTD return now near flat.
Meta Platforms Inc. (Nasdaq: META) delivered better-than-expected Q1 results, sending shares up 5.5% to $579.17 in Thursday morning trading. The strong quarter helped calm investor nerves after recent macro pressures, including the U.S. trade war and European regulatory challenges.
Meta reported $42.3 billion in Q1 revenue, up 16% year over year and ahead of the $41.4 billion estimate. Earnings easily beat forecasts by more than $1 per share. Founder Mark Zuckerberg credited growing AI adoption and improved user engagement across Facebook, Instagram, and Threads.
Despite today’s pop, META shares are still nearly flat for 2025, with a modest -0.89% return year to date.
$META Zuck solidly monetising our social addictions. Rev +16% (vs +21% last Q). US Ad rev +18% at this scale is WILD! Scaling well, genuine cost control = EBIT margin 41% vs 38% exp! 🤓 24% FCF margin ex-SBC. EPS +37%, booya! Q2 guide +13% was inline, ‘25 cost guide fine. pic.twitter.com/Doy7Uprhgj
— Wasteland Capital (@ecommerceshares) May 1, 2025
Advertising Engine Roars Back
Meta’s core Family of Apps — which includes Facebook, Instagram, WhatsApp, and Threads — generated $41.9 billion in revenue, up 16%. Advertising sales alone accounted for $41.4 billion, also rising 16%, dispelling concerns about softer ad budgets amid global uncertainty.
The company highlighted AI-driven ad tools that are boosting conversion rates and attracting more advertisers, helping Meta widen its competitive moat against platforms like TikTok and Snap.
AI Ambitions Expand Despite High Costs
Zuckerberg spotlighted Meta’s AI gains, revealing nearly 1 billion monthly active users for Meta AI across platforms. Hardware sales, like the Ray-Ban Meta AI glasses, tripled year over year, signaling early traction in AI-powered devices.
However, these AI and infrastructure bets come at a cost. Capital expenditures soared to $13.7 billion in Q1, and full-year 2025 capex is now projected between $64 billion and $72 billion — up from prior forecasts. The company acknowledged some AI infrastructure capacity constraints that could slow product rollouts.
Reality Labs Losses Persist
Meta’s Reality Labs division, which handles VR and AR projects, continued to bleed cash. The unit reported $412 million in revenue, down 6%, and an operating loss of $4.2 billion for the quarter. These mounting losses remain a sore spot for investors betting on Meta’s metaverse vision.
Outlook and Challenges
Meta guided Q2 revenue between $42.5 billion and $45.5 billion, roughly in line with expectations. Management flagged higher infrastructure costs and ongoing regulatory scrutiny in the EU as potential headwinds.
Still, with strong ad sales, accelerating AI engagement, and robust cash reserves of $70.2 billion, Meta appears well-positioned to navigate near-term challenges.
Conclusion
Meta’s Q1 beat shows its core advertising machine remains strong, while AI-driven initiatives gain momentum. Shares jumped as investors cheered the solid top-line growth and upbeat guidance. While Reality Labs losses and higher capex temper the long-term picture, Meta’s fundamentals suggest continued strength as it deepens its AI and digital dominance in 2025.
