Meta reported earnings on Wednesday, beating Wall Street’s expectations for yet another quarter even as it lavishes billions on artificial intelligence.
Meta posted $42.32bn in revenue in the first quarter of 2025, beating both its own quarterly revenue goals of $41.8bn at the higher end and Wall Street expectations of $41.38bn.
The company also reported $6.43 in earnings per share, beating Wall Street projections of $5.27. Shares jumped in after-hours trading.
“We’ve had a strong start to an important year, our community continues to grow and our business is performing very well,” said Meta’s chief executive, Mark Zuckerberg. “We’re making good progress on AI glasses and Meta AI, which now has almost 1bn monthly actives.”
Speaking on the investor call, Zuckerberg said the company was performing well and its platforms were growing, making it “well-positioned to navigate” any macroeconomic uncertainty.
“I continue to think this year is going to be a pivotal moment in our industry,” he said.
This continues Meta’s streak of beating Wall Street expectations over the past few quarters. However, it is unclear if it will be enough to quell investor concerns. Analysts were disappointed by the first quarter revenue outlook Zuckerberg shared at the end of 2024. The company has also updated its outlook on spending for the next year with plans to spend anywhere from $64-72bn in capital expenditures including the cost of building out AI infrastructure. That is up from $65bn the company originally said it was expecting to spend in 2025. Total costs and expenditures for the first quarter were already at $24.76bn, a 9% increase compared to the year prior. Uncertainty over Donald Trump’s sweeping tariffs may yet roil ad markets, clouding the company’s financial outlook for near future quarters.
EMarketer senior analyst Minda Smiley said the company’s “optimistic Q2 guidance signals that the company isn’t expecting any major dips in ad revenue” as a result of the tariffs. But that they don’t expect Meta will be spared from the downturn in the long term.
“On the one hand, the company stands to gain from economic instability. Advertisers will allocate more ad dollars to proven, sophisticated networks like Facebook and Instagram – all while pulling back spend on smaller social platforms – while they navigate uncertainty,” Smiley said. “On the other hand, a small but significant portion of Meta’s revenue comes from Chinese retailers like Temu and Shein advertising to US shoppers. That spend is starting to dry up as a result of trade and tariff change.”
Meta’s spending also continues to “weigh heavily on investors”, according to analyst Debra Aho Williamson, the founder and chief analyst of Sonata Insights. “But Meta will resist directly monetizing AI this year, focusing instead on building AI usage among its app users, advertisers and developers using Llama,” said Williamson.
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In the weeks leading up to the earnings report, Meta has had a mix of AI-related news including the launch of a standalone AI app that would serve as its ChatGPT competitor. But a WSJ report exposed the existing chatbots integrated into the company’s various products, including Facebook and Instagram, were given the ability to perform “romantic role play” even with the platforms’ teen users. Executives at the company, which repeatedly has touted its nearly 1 billion users of its AI chatbots, also admit that many of those users access the chatbot through its hard-to-avoid takeover of the search bars of WhatsApp, Instagram and Facebook. The company has not detailed how many interactions with the chatbot or how deep those interactions need to be to consider a person a user of the AI chatbot.
Paired with Meta’s ongoing antitrust trial – where the company faces claims that it built an illegal social media monopoly with its acquisition of Instagram and WhatsApp – the uncertain AI future adds to the concerns some analysts may have around Meta’s financials despite what it may look like on paper.
“Meta’s earnings call comes at a precarious time where the company’s future is literally being debated in court – the results of which could fundamentally alter the social media landscape,” said Forrester VP’s research director, Mike Proulx. “Meta is smart to direct more resources into improving Threads and Facebook since those could be the only two apps the company is left with. It’s also notable that Meta just laid off a number of employees in its Reality Labs division, which has been a continued and growing leaky bucket for Meta.”
