Meta’s first quarter saw a significant negative market reaction despite revenue, GAAP earnings, and adjusted EBITDA all exceeding Wall Street expectations. Management attributed the strong year-over-year growth in revenue to advances in AI-powered ad targeting and increased engagement across Instagram and Facebook, particularly in video formats. CEO Mark Zuckerberg emphasized that improvements in recommendation algorithms and the roll-out of new AI models drove higher user engagement, but noted that these gains were partly offset by increased infrastructure costs and technical hiring. CFO Susan Li highlighted that while ad impressions and average prices grew, operating expenses surged due to higher data center and employee costs, reflecting Meta’s ongoing investment in artificial intelligence and next-generation products.
Is now the time to buy META? Find out in our full research report (it’s free for active Edge members).
Meta (META) Q1 CY2026 Highlights:
- Revenue: $56.31 billion vs analyst estimates of $55.55 billion (33.1% year-on-year growth, 1.4% beat)
- Adjusted EPS: $7.31 vs analyst estimates of $6.82 (7.2% beat)
- Adjusted EBITDA: $34.9 billion vs analyst estimates of $31.24 billion (62% margin, 11.7% beat)
- Revenue Guidance for Q2 CY2026 is $59.5 billion at the midpoint, roughly in line with what analysts were expecting
- Operating Margin: 40.6%, in line with the same quarter last year
- Daily Active People: 3.56 billion, up 130 million year on year
- Market Capitalization: $1.54 trillion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Meta’s Q1 Earnings Call
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Brian Thomas Nowak (Morgan Stanley) asked about the signposts Meta is watching to ensure return on its large AI and infrastructure investments. CEO Mark Zuckerberg responded that the company tracks product quality, scaling, and monetization, with a long-term focus on building world-class models and products at scale.
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Mark Elliott Shmulik (Bernstein) questioned whether team priorities are shifting from model training to product launches. Zuckerberg explained that research and product teams work in parallel—one focused on advanced model development and the other on scaling products using those models.
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Eric James Sheridan (Goldman Sachs) inquired about the opportunities for AI agents in both consumer and business segments. CFO Susan Li noted near-term focus on deepening engagement and monetization, especially for SMBs, while longer-term agentic capabilities will expand into premium and commission-based offerings.
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Justin Post (Bank of America) asked about the product cadence following the Muse Spark launch. Zuckerberg emphasized the importance of quality over launch timing, stating, "We care a lot about just having something I would give to my mother," and indicated rapid progress in both research and product development.
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Douglas Till Anmuth (JPMorgan) sought clarity on the impact of moving from smaller ad models to larger LLM-based systems. Li highlighted that new adaptive ranking models allow Meta to use more complex models in ads without sacrificing speed, improving both conversion rates and monetization.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) the pace at which Meta’s personal and business AI agents gain user and advertiser adoption, (2) whether infrastructure investments translate into improved product capabilities and operational efficiency, and (3) how management navigates expense growth and regulatory scrutiny, especially as new AI-driven products launch across Meta’s family of apps.
Meta currently trades at $602.89, down from $669.12 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).
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