Surprising earnings send Meta Platforms stock soaring

Shares in Meta Platforms are rising after quarterly earnings results.

May 1, 2025 - 01:26

Surprising earnings send Meta Platforms stock soaring

Meta Platforms joined artificial intelligence Goliath Microsoft in reporting better-than-expected quarterly earnings results after the closing bell on April 30.

The parent company of Facebook, Instagram, and WhatsApp delivered revenue and profit that outpaced Wall Street analyst expectations, easing concern that AI-related spending would tax its bottom line and AI penetration might slow top-line growth rates.

Meta Platform's solid revenue and profit during the quarter sent its shares surging 5% in post-market trading.

Mark Zuckerberg, chief executive officer of Meta Platforms Inc., has bet big on artificial intelligence to support quarterly revenue and profit growth.
Bloomberg/Getty Images

Meta Platforms continues to enjoy AI tailwinds

Meta Platforms is best known for its dominance of social media via Facebook and Instagram. However, it's also behind the popular WhatsApp messaging service and Oculus, a virtual reality brand.

In the company's first quarter, revenue surged 16% to $42.3 billion, outpacing Wall Street estimates by $950 million. Meanwhile, its earnings clocked in at $6.43 per share, a robust $1.21 better than forecasts.

Operating margin expanded to 41% from 38% last year, while net income expanded by 35% to $16.6 billion. Earnings per share were up an impressive 37%.

Meta Platforms' growth was driven by increased ad impressions on its apps, ad price growth, and more daily users.

The company said that impressions rose 5% year over year, while the average ad price per ad improved by 10%. Daily active people on its apps increased by 6% compared to one year ago.

Ad revenue totaled $41.4 billion, with $18.3 billion coming from the U.S. and Canada. One year ago, it was $35.6 billion and $15.5 billion, respectively.

Meta Platforms rallies on guidance, management boosts AI spending

One of the biggest concerns facing technology stocks in 2025 is the risk that robust AI spending over the past two years has outpaced demand, suggesting a ratcheting back in AI investment is likely in the coming year.

Meta Platform's spending guidance puts some of that risk to rest.

The company says that while its total expenses this year will be $113 to $118 billion, down from prior guidance for $114 billion to $119 billion, it will increase its AI outlays. It now expects capex to be $64 billion to $72 billion, up from $60 billion to $65 billion.

The increase in capex is due to boosts in data center spending to support its AI plans.

Despite the spending, Meta Platforms finished the quarter with $70.2 billion in cash and equivalents.

As for guidance, CEO Mark Zuckerberg is targeting revenue of $42.5 billion to $45.5 billion in the second quarter.