Meta Platforms Q1 Earnings Preview: Key Areas to Watch Amid Growth, Tariffs, and Legal Overhangs

Meta Platforms (META) will report first-quarter earnings after the close on April 30, with investors laser-focused on several critical themes: advertising revenue trends, expense guidance, AI growth initiatives, and the impact of tariffs on China-based advertising. While legal risks linger, including FTC-driven antitrust lawsuits, analysts suggest these are a secondary concern compared to how Meta will navigate an evolving macro landscape. Guidance commentary for Q2 and beyond is expected to be the biggest stock catalyst, with tariff concerns, ad pricing, and cost control all under the microscope.

Watch:  META Earnings Preview: Why AI & Threads Could Fuel the Next Big Surge

Expectations for Q1 Results

Analysts expect Meta to post Q1 adjusted earnings per share (EPS) of $5.24 on revenue of $41.34 billion, reflecting 11% and 13% growth year-over-year, respectively, according to FactSet. These figures are at the high end of Meta’s previously guided revenue range of $39.5 billion to $41.8 billion. A strong beat would extend Meta’s streak of outpacing expectations, but given the elevated bar and cautious ad sentiment, in-line results could be enough to stabilize the stock.

On the expense side, investors are keenly awaiting any updates to full-year operating expense and capital expenditure guidance. Piper Sandler expects management to reaffirm operating expenses of $114 billion to $119 billion and CapEx of $60 billion to $65 billion for 2025. Cost discipline will be critical, especially as Meta ramps its investments in AI and faces Reality Labs losses, estimated at $15 to $20 billion annually.

Valuation Snapshot

Meta enters this report trading around $547 per share, down nearly 9% year-to-date and about 27% below recent highs. According to Benchmark, the stock is trading at just 1.03x the S&P 500’s next-twelve-months (NTM) P/E ratio, placing it at the lower end of its historical valuation range. Analyst sentiment remains broadly bullish, with price targets averaging near $695—suggesting substantial upside if Meta can navigate near-term headwinds.

Key Metrics to Watch

Advertising remains the dominant revenue engine for Meta, with sales tied heavily to its four major platforms: Facebook, Instagram, Messenger, and WhatsApp. As Angelo Zino of CFRA Research explains, Meta is "essentially a digital ad business," distinct from peers like Alphabet that have broader business line diversification.

Analysts expect ad revenue growth in the low-teens percentage range. Zino points out that Q2 could see some tailwind from a weakening dollar, but broader 2025 growth could slow toward mid-to-high single digits if macro conditions deteriorate. Additionally, the average price per ad, which rose 10% last year, will be scrutinized for signs of weakening demand amid mounting tariff headwinds.

Impact of Tariffs and Macroeconomic Risks

Tariff risk has emerged as a significant overhang for Meta. Chinese cross-border e-commerce players like Temu and Shein, key Meta advertisers, have pulled back spending after the U.S. tightened its de minimis import exemption and expanded tariffs. MoffettNathanson warns this could materially hit Meta’s 2025 financial performance, potentially erasing billions in ad revenue.

LOOP Capital estimates a 40% revenue leakage from lost Chinese advertiser demand. Truist and Piper Sandler are forecasting softer Q2 revenue guidance as a result, expecting a range of $41.5 billion to $44.0 billion, compared to current consensus at $43.9 billion.

Still, Zino notes that while tariffs could trim revenue by 3% to 5%, other positives—like AI monetization improvements and currency tailwinds—could partly offset these impacts.

Legal Overhangs: Noise or Real Threat?

Meta continues to face antitrust challenges, including the FTC's efforts to potentially force divestitures of Instagram and WhatsApp. However, Zino views the legal risks as “overblown,” arguing that TikTok, Snapchat, Pinterest, and YouTube offer sufficient competition in the social media space to weaken monopoly arguments. While regulatory noise may fuel volatility, most analysts agree it is unlikely to materially impact the business near term.

AI and Growth Story Beyond 2025

Long-term growth optimism centers heavily around Meta’s AI initiatives. The company is making aggressive bets on Llama (its open-source language model), AI agents, and Threads monetization. Zino believes these assets could begin materially contributing to revenue by 2026-2027. He emphasizes that Meta’s expanding AI footprint could make it one of the biggest tech beneficiaries of the next major platform shift, a point the company will likely reinforce on its earnings call.

Meta’s AI-related capital spend is enormous but seen as strategic. Investors will be watching closely for updates around the commercial rollout of Llama and Threads advertising tests, which could frame Meta's growth trajectory for years to come.

Bottom Line

For Q1, the story is less about what Meta earns today and more about what it guides for tomorrow. Clear commentary on tariff impacts, expense discipline, and AI opportunities will likely dictate whether Meta shares can reclaim momentum. Legal risks may create headline noise, but fundamentals around ad revenue resilience and emerging AI monetization are expected to dominate the investment narrative in the quarters ahead.