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META expects total revenues between $53.5 billion and $56.5 billion, including 4% tailwind from favorable forex.
The Zacks Consensus Estimate for first-quarter revenues is pegged at $55.49 billion, indicating an increase of 31.2% from the year-ago quarter’s reported figure. The consensus mark for earnings stands at $6.71 per share, up a couple of cents over the past 30 days, suggesting growth of 4.4% from the figure reported in the year-ago quarter.
Consensus Estimate Trend
Image Source: Zacks Investment Research
Meta Platforms’ earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 15.87%.
Let’s see how things have shaped up for the upcoming announcement.
Strong Advertising Growth to Aid META’s Q1 Results
META’s focus on integrating AI into its platforms — Facebook, WhatsApp, Instagram, Messenger and Threads — is driving user as well as advertising engagements. AI is heavily dependent on data, of which META has a trove, driven by its more than 3.58 billion daily users, including 2 billion daily actives each on Facebook and WhatsApp. Their staggering reach and increasing ad impressions (up 18% year over year in the fourth quarter of 2025) make META one of the most important players in the digital ad sales market, apart from Alphabet (GOOGL - Free Report) and Amazon (AMZN - Free Report) . Meta Platforms, along with Alphabet and Amazon, are expected to absorb more than 62% of the projected global digital ad spending in 2026, per the latest EMARKETER data.
Time spent across platforms benefits from Meta Platforms’ continuous ranking optimizations. AI recommendations that deliver higher quality and more relevant content are expected to drive engagement. The company is using Meta AI to boost user experience. Focus on expanding personalization on Meta AI is expected to help the company understand user interests and preferences, as well as identify the most relevant content across the META platform. The company has started testing Meta AI business assistant with advertisers, which helps with tasks like campaign optimization and account support. Meta Platforms has extended its Andromeda ads retrieval engine so it can now run on NVIDIA, AMD and MTIA.
The Zacks Consensus Estimate for first-quarter 2026 advertising revenues is currently pegged at $54.36 billion, suggesting 31.3% year-over-year growth.
However, rising expenses related to investments in developing more advanced models and AI services are expected to keep margins under pressure. The Zacks Consensus Estimate for Family of Apps’ operating margin is indicated to contract 560 basis points on a year-over-year basis to 45.8%. The Reality Labs business continues to report losses, which doesn’t bode well for META’s first-quarter results. The consensus mark for Reality Labs’ loss is pegged at $5.59 billion, wider than the year-ago quarter’s loss of $4.21 billion.
META Shares Underperform Sector; Valuation Stretched
META shares have climbed 2.2% year to date (YTD), underperforming the Zacks Computer & Technology sector’s appreciation of 8.8%. Shares have underperformed Alphabet and Amazon but outperformed Snap (SNAP - Free Report) . YTD, Alphabet and Amazon shares have appreciated 10% and 14.4%, respectively, while Snap shares have declined 30%.
META Stock Underperforms Sector
Image Source: Zacks Investment Research
Meta Platforms’ current valuation is stretched, as suggested by the Value Score of C.
In terms of the forward 12-month price/sales, META is trading at 6.44X, higher than the Zacks Internet Software industry’s 3.98X, Snap’s 1.37X and Amazon’s 3.39X but lower than GOOGL’s 9.66X.
META Shares are Overvalued
Image Source: Zacks Investment Research
META Leverages AI to Boost Growth, Higher Capex Hurts
Meta Platforms expects to advance the capabilities of its underlying media generation models and ship new features to further enhance the product experience in 2026. Beyond improvements to its recommendation systems, Meta Platforms expects to use the models developed by Meta Superintelligence Labs to deliver compelling and differentiated AI products. The company has a strong pipeline of ad supply opportunities on both Threads and WhatsApp Status over the long term.
Moreover, the latest multi-year deal with NVIDIA will support META’s build-out of data centers optimized for AI training and inference, as well as its core business. The NVDA deal supports META’s AI-related endeavors. The company is also adopting NVIDIA Confidential Computing for WhatsApp private messaging and the NVIDIA Spectrum-X Ethernet networking platform across its infrastructure footprint.
However, Meta Platforms is spending heavily on AI research, models and infrastructure. The company now expects 2026 capital spending between $115 billion and $135 billion. Per CNBC, Alphabet, Meta Platforms, Amazon and Microsoft on a combined basis are expected to spend roughly $700 billion on developing AI infrastructure in 2026. Although these investments are expected to boost META’s prospects over the long term, a challenging macroeconomic environment, regulatory issues (in the European Union and the United States) and stiff competition in the ad market from the likes of Alphabet, Amazon, Snap and TikTok, among others, is expected to remain an overhang on the shares. Higher capital spending is also expected to squeeze free cash flow.
META is expected to suffer from higher operating expenses. For 2026, META anticipates total expenses between $162 billion and $169 billion, driven by higher infrastructure costs, which include third-party cloud spend, higher depreciation and higher infrastructure operating expenses. Higher employee compensation driven by hires in the AI space is expected to drive expenses.
Conclusion
META’s improved recommendation system is driving up user engagement. AI usage is making the company a popular name among advertisers. However, Meta Platforms is spending heavily on expanding AI infrastructure, which is expected to squeeze free cash flow. Higher operating expenses are expected to hurt earnings prospects in the near term. This, along with stiff competition in the advertising market and a stretched valuation, is a headwind for prospective investors.
View the Zacks #1 Rank List
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Buy, Sell or Hold Meta Platforms Stock? Key Tips Ahead of Q1 Earnings
Key Takeaways
Meta Platforms (META - Free Report) is set to report its first-quarter 2026 results on April 29.
META expects total revenues between $53.5 billion and $56.5 billion, including 4% tailwind from favorable forex.
The Zacks Consensus Estimate for first-quarter revenues is pegged at $55.49 billion, indicating an increase of 31.2% from the year-ago quarter’s reported figure. The consensus mark for earnings stands at $6.71 per share, up a couple of cents over the past 30 days, suggesting growth of 4.4% from the figure reported in the year-ago quarter.
Consensus Estimate Trend
Image Source: Zacks Investment Research
Meta Platforms’ earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 15.87%.
Meta Platforms, Inc. Price and EPS Surprise
Meta Platforms, Inc. price-eps-surprise | Meta Platforms, Inc. Quote
Let’s see how things have shaped up for the upcoming announcement.
Strong Advertising Growth to Aid META’s Q1 Results
META’s focus on integrating AI into its platforms — Facebook, WhatsApp, Instagram, Messenger and Threads — is driving user as well as advertising engagements. AI is heavily dependent on data, of which META has a trove, driven by its more than 3.58 billion daily users, including 2 billion daily actives each on Facebook and WhatsApp. Their staggering reach and increasing ad impressions (up 18% year over year in the fourth quarter of 2025) make META one of the most important players in the digital ad sales market, apart from Alphabet (GOOGL - Free Report) and Amazon (AMZN - Free Report) . Meta Platforms, along with Alphabet and Amazon, are expected to absorb more than 62% of the projected global digital ad spending in 2026, per the latest EMARKETER data.
Time spent across platforms benefits from Meta Platforms’ continuous ranking optimizations. AI recommendations that deliver higher quality and more relevant content are expected to drive engagement. The company is using Meta AI to boost user experience. Focus on expanding personalization on Meta AI is expected to help the company understand user interests and preferences, as well as identify the most relevant content across the META platform. The company has started testing Meta AI business assistant with advertisers, which helps with tasks like campaign optimization and account support. Meta Platforms has extended its Andromeda ads retrieval engine so it can now run on NVIDIA, AMD and MTIA.
The Zacks Consensus Estimate for first-quarter 2026 advertising revenues is currently pegged at $54.36 billion, suggesting 31.3% year-over-year growth.
However, rising expenses related to investments in developing more advanced models and AI services are expected to keep margins under pressure. The Zacks Consensus Estimate for Family of Apps’ operating margin is indicated to contract 560 basis points on a year-over-year basis to 45.8%. The Reality Labs business continues to report losses, which doesn’t bode well for META’s first-quarter results. The consensus mark for Reality Labs’ loss is pegged at $5.59 billion, wider than the year-ago quarter’s loss of $4.21 billion.
META Shares Underperform Sector; Valuation Stretched
META shares have climbed 2.2% year to date (YTD), underperforming the Zacks Computer & Technology sector’s appreciation of 8.8%. Shares have underperformed Alphabet and Amazon but outperformed Snap (SNAP - Free Report) . YTD, Alphabet and Amazon shares have appreciated 10% and 14.4%, respectively, while Snap shares have declined 30%.
META Stock Underperforms Sector
Image Source: Zacks Investment Research
Meta Platforms’ current valuation is stretched, as suggested by the Value Score of C.
In terms of the forward 12-month price/sales, META is trading at 6.44X, higher than the Zacks Internet Software industry’s 3.98X, Snap’s 1.37X and Amazon’s 3.39X but lower than GOOGL’s 9.66X.
META Shares are Overvalued
Image Source: Zacks Investment Research
META Leverages AI to Boost Growth, Higher Capex Hurts
Meta Platforms expects to advance the capabilities of its underlying media generation models and ship new features to further enhance the product experience in 2026. Beyond improvements to its recommendation systems, Meta Platforms expects to use the models developed by Meta Superintelligence Labs to deliver compelling and differentiated AI products. The company has a strong pipeline of ad supply opportunities on both Threads and WhatsApp Status over the long term.
Moreover, the latest multi-year deal with NVIDIA will support META’s build-out of data centers optimized for AI training and inference, as well as its core business. The NVDA deal supports META’s AI-related endeavors. The company is also adopting NVIDIA Confidential Computing for WhatsApp private messaging and the NVIDIA Spectrum-X Ethernet networking platform across its infrastructure footprint.
However, Meta Platforms is spending heavily on AI research, models and infrastructure. The company now expects 2026 capital spending between $115 billion and $135 billion. Per CNBC, Alphabet, Meta Platforms, Amazon and Microsoft on a combined basis are expected to spend roughly $700 billion on developing AI infrastructure in 2026. Although these investments are expected to boost META’s prospects over the long term, a challenging macroeconomic environment, regulatory issues (in the European Union and the United States) and stiff competition in the ad market from the likes of Alphabet, Amazon, Snap and TikTok, among others, is expected to remain an overhang on the shares. Higher capital spending is also expected to squeeze free cash flow.
META is expected to suffer from higher operating expenses. For 2026, META anticipates total expenses between $162 billion and $169 billion, driven by higher infrastructure costs, which include third-party cloud spend, higher depreciation and higher infrastructure operating expenses. Higher employee compensation driven by hires in the AI space is expected to drive expenses.
Conclusion
META’s improved recommendation system is driving up user engagement. AI usage is making the company a popular name among advertisers. However, Meta Platforms is spending heavily on expanding AI infrastructure, which is expected to squeeze free cash flow. Higher operating expenses are expected to hurt earnings prospects in the near term. This, along with stiff competition in the advertising market and a stretched valuation, is a headwind for prospective investors.
Meta Platforms currently has a Zacks Rank #3 (Hold), which implies that investors should wait for a more favorable point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.