By Jaspreet Singh and Kenrick Cai
(Reuters) -Meta Platforms rode strong advertising performance to beat analysts’ revenue estimates for the first quarter and match expectations for the next quarter on Wednesday, assuaging concerns from investors over tariff-related economic growth fears.
Shares of the company were up nearly 6% in extended trading.
The Facebook and Instagram parent company reported revenue of $42.31 billion for the first quarter, compared with analysts’ average estimate of $41.40 billion, according to data compiled by LSEG.
Meta expects second-quarter revenue to be between $42.5 billion and $45.5 billion, compared with estimates of $44.01 billion.
The company reported profits of $6.43 per share, beating estimates of $5.28 per share, per the LSEG data.
It also boosted its 2025 capital expenditure plans to between $64 billion and $72 billion. CEO Mark Zuckerberg previously said the company could spend as much as $65 billion this year.
CFO Susan Li said in a statement the increase reflected additional data center investments to support artificial intelligence efforts, as well as increases in hardware costs.
The increased spending outlays could help soothe concerns that AI interest might be waning, especially after analysts in March flagged early signs of tech majors pulling back on new data center commitments.
Shares of AI chip makers rose after Meta and Microsoft reported financial results. Nvidia rose 2.8% and Advanced Micro Devices rose 2%.
Still, the increased spending represents a red flag due to market concerns over economic turmoil, said Debra Aho Williamson, founder and chief analyst at Sonata Insights.
“If ad revenue continues to hold strong, then this increase in capital expenditures will be less of a bitter pill for investors to swallow,” Williamson said.
Meta lowered its total expenses forecast for the year to between $113 billion and $118 billion, from its earlier expectations of $114 billion to $119 billion.
Family daily active people (DAP), a metric it uses to track unique users who open any one of its apps in a day, rose 6% year-over-year to 3.43 billion.
That massive user base makes Meta a reliable go-to for advertisers at a time when U.S. tariff-induced uncertainty has prompted companies to tighten marketing budgets and delay campaigns.
Advertising accounts for the vast majority of Meta’s revenue. Some of the biggest U.S. advertisers include Chinese e-commerce websites Temu and Shein, and they are sharply cutting their U.S. digital ad spending, industry data showed.
Google parent Alphabet said during its quarterly earnings last week that it expected a “slight headwind” to ad revenues due to changes in U.S. President Donald Trump’s trade policy.
A day earlier, smaller rival Snap held back its second-quarter forecast and said that economic uncertainty and the Trump administration’s ending of a duty-free import loophole was affecting its ad business, causing its shares to crater.
Meta’s proven advertising reliability means it stands to gain from economic instability, said Emarketer senior analyst Minda Smiley.
However, it “won’t be spared from a broader downturn if advertisers make substantial budget cuts and consumer spending falters,” she added.
Meta is facing a high-stakes trial in Washington, in which the U.S. Federal Trade Commission is seeking to unwind the company’s acquisitions of prized assets Instagram and WhatsApp.
The Menlo Park, California-based company is also fighting the perception it may have fallen behind in the AI race, after its initial set of Llama 4 large language models, released earlier this month, fell short of performance expectations.
(Reporting by Jaspreet Singh in Bengaluru, Kenrick Cai in San Francisco, Echo Wang in New York; Editing by Sriraj Kalluvila, Alan Barona and Nia Williams)
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