The meta platform beat analysts' first quarter revenue estimates and rode strong advertising performances to match expectations for the next quarter on Wednesday, easing concerns from investors about the fear of tariff-related economic growth.
The company's shares rose nearly 6% in extended transactions.
The parent company of Facebook and Instagram reported revenue of $423.1 billion in the first quarter, compared to an analyst average estimate of $414 billion, according to data compiled by LSEG.
Meta expects second quarter revenue to be between $42.5 billion and $45.5 billion, compared to an estimate of $440.1 billion.
The company reported earnings of $6.43 per share, breaking an estimate of $5.28 per share per LSEG data.
It also raised its capital expenditure plan for 2025 from $64 billion to $72 billion. CEO Mark Zuckerberg previously said the company could spend $65 billion this year.
CFO Susan Lee said in a statement that the increase reflects additional data center investments to support artificial intelligence efforts and increased hardware costs.
Increases in spending spending could help ease concerns that AI interest could wander, particularly after analysts flagged early signs of technology majors that rebounded new data center commitments.
Stocks of the AI chip maker rose after Meta and Microsoft reported financial results. Nvidia rose 2.8%, while advanced microdevices rose 2%.
Still, the increase in spending represents a red flag of market concerns over economic disruption, said Debra Aho Williamson, founder and chief analyst of Sonata Insights.
“If advertising revenue continues to be strong, this increase in capital expenditure is not a bitter medicine for investors to engulf them,” Williamson said.
Meta cut its total annual costs from $113 billion to $118 billion from previous expectations of $11.4 billion to $119 billion.
Family Daily Active People (DAP) is a metric used to track unique users who open one of their apps in one day, rising 6% year-on-year to 3.43 billion people.
This large user base is a reliable go-to for advertisers when uncertainty from US tariffs causes businesses to tighten their marketing budgets and delay campaigns.
Advertising accounts for the majority of Meta's revenue. The largest advertisers in the US include Chinese e-commerce websites Temu and Shein, which are significantly reducing US digital ad spending, industry data shows.
Google Parent Alphabet said in its quarterly revenue last week it expects a “slight headwind” in advertising revenue due to changes in President Trump's trade policy.
A day ago, a small rival Snap thwarted its second-quarter forecast, saying that economic uncertainty and the Trump administration's end of duty-free import loopholes have affected advertising operations, causing stocks to crater.
Meta's proven advertising reliability means it means profiting from economic instability, said Minda Smiley, senior analyst at Emarketer.
But, she added, “If advertisers experience substantial budget cuts and consumer spending declines, it “will not be able to escape the wider recession.”
Meta is facing a high-stakes trial in Washington, and the Federal Trade Commission unlocks the acquisition of valuable assets on Instagram and WhatsApp.
The Menlo Park, California-based company is fighting a perception that could have been behind in AI races after the first set of the four major Llama language models released earlier this month failed to meet performance expectations.
