Meta Navigates Tariff Turbulence with Strong Q1 Growth and AI Investment Surge
1min read In the first quarter of this year, meta, the tech giant managing prominent social media platforms like facebook, successfully weathered the challenges posed by impending tariff issues under the Trump administration. Despite expectations of a more drastic slowdown, Meta's revenue and profit growth remained relatively robust, with advertising—a significant revenue source—performing steadily.
Following the release of its financial report, Meta's stock, which had ended the day down nearly 1%, surged in after-hours trading, at one point climbing by 6%. On April 30th, Meta disclosed its financial results for the first quarter ending March 31st, 2025, and provided guidance for the second quarter and the full year.
For the first quarter, Meta reported revenues of $423.1 billion, marking approximately a 16% increase compared to the same period the previous year. The company's earnings per share (EPS) rose by approximately 37% to $6.43, surpassing analyst estimates. However, Meta observed a notable cost aspect, with capital expenditures increasing substantially, driven by ongoing investments in artificial intelligence (AI).
Meta's financial projections for the second quarter align with market expectations, with revenue estimated between $425 billion and $455 billion. Importantly, the company has significantly raised its capital expenditure forecast for the year, now expected to be between $64 billion and $72 billion—a substantial increase from earlier estimates.
Commenting on the rising capital expenditure, Meta emphasized that the updated guidance reflects additional investments in data centers to support AI initiatives, along with anticipated increases in infrastructure hardware expenses. These investments, Meta noted, will primarily focus on the company’s core businesses.
Meta's CFO, Susan Li, pointed out a downturn in advertising spending from Asian e-commerce exporters, a shift attributed to tariff impacts. While some spending has been redirected to other markets, the overall expenditure from these advertisers was lower compared to levels prior to April.
CEO Mark Zuckerberg expressed optimism, citing the company's ability to adapt to macroeconomic uncertainties. He highlighted continued strong user engagement across platforms, with Facebook's daily active users exceeding expectations, reaching 3.43 billion—an increase of 6% year-over-year.
Despite stable core operations, Meta's Reality Labs, involved in AR and VR technology, reported a 6% decline in revenue, underscoring challenges in the burgeoning metaverse sector. The segment experienced a hefty quarterly operating loss of $4.21 billion, though less severe than some predictions.
The strategic focus on AI continues to shape Meta’s trajectory, with the company aiming to leverage AI capabilities, such as through the recently launched Meta AI app. Zuckerberg revealed ambitions to transform Meta AI into a revenue-generating platform while indicating that monetization efforts would follow product development phases.
