TLDR
- Meta stock dropped more than 10% after Q1 2026 earnings, wiping roughly $175 billion in market cap
- Revenue hit $56.31 billion, up 33% year over year — the strongest quarterly growth since 2021
- Meta raised its 2026 capex guidance to $125–$145 billion, up from $115–$135 billion
- JPMorgan downgraded META to Neutral from Overweight, cutting its price target to $725 from $825
- Daily active users came in at 3.56 billion, missing Wall Street’s estimate of 3.62 billion
Meta Platforms reported one of its strongest quarters in years on April 29, 2026, and the stock still fell more than 10% the next day. META was trading around $610 at time of writing, down from levels above $700 before the report.
Revenue came in at $56.31 billion, up 33% year over year. That’s the fastest quarterly growth the company has posted since 2021. Net income reached $26.8 billion, or $10.44 per diluted share, though that figure included an $8.03 billion one-time tax benefit tied to U.S. Treasury R&D guidance.
Strip that out, and the earnings picture is still solid — just less eye-catching than the headline number.
Ad impressions rose 19% year over year. More than 4 million advertisers are now using at least one of Meta’s generative AI creative tools. Family daily active people reached 3.56 billion, though that came in below Wall Street’s estimate of 3.62 billion.
Meta attributed the user miss to internet disruptions in Iran and WhatsApp restrictions in Russia.
JPMorgan Pulls Its Bullish Rating
The move that rattled the market most wasn’t the earnings miss on users — it was JPMorgan.
Analyst Doug Anmuth, previously one of Meta’s biggest bulls on Wall Street, downgraded the stock to Neutral from Overweight and cut his price target to $725 from $825 on April 30.
The trigger was Meta’s updated capital expenditure guidance. The company raised its full-year capex range to $125–$145 billion, up from $115–$135 billion. That’s the second consecutive upward revision. Meta’s original 2026 capex guidance, set in January, was $115–$135 billion.
Q1 capex alone came in at $19.8 billion, up 47% year over year. CFO Susan Li pointed to higher memory-chip prices and additional data center costs as the drivers.
Anmuth’s concern isn’t the size of the spending. It’s the return on it. “We believe full-stack AI competition is intensifying and Meta has a more challenging path to returns on heavy AI capex beyond advertising,” he wrote.
He projects Meta’s capex will grow to $202 billion in 2027, resulting in negative free cash flow of $4 billion in 2026 and $24 billion in 2027.
Where the Spending Goes
Meta’s AI push centers on its own large language models, data center buildout, and its newly launched Muse Spark model — the first release from its superintelligence lab.
Daily users of Meta AI glasses tripled year over year in Q1. Reality Labs posted an operating loss of $4.03 billion for the quarter.
Anmuth acknowledged Muse Spark as “the first step towards Meta’s goal of pushing the frontier and delivering personal superintelligence to billions of users,” but flagged that the path from that investment to non-advertising revenue remains unclear.
Most other analysts didn’t follow JPMorgan’s lead. Barclays, Cantor Fitzgerald, and TD Cowen all trimmed price targets while maintaining bullish ratings.
Anmuth also flagged two near-term headwinds for Q2: tougher year-over-year revenue comparisons and the rollout of European Limited Privacy Advertisements, which is expected to pressure revenue starting in Q2.
JPMorgan’s new $725 price target implies roughly 8% upside from current levels.
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