Meta Stock Soars 6.28% on Strong Q1 Earnings, AI Investments

Meta's stock rose 6.28% in pre-market trading on May 1, 2025, driven by the company's strong first-quarter earnings and a positive outlook for the second quarter. The company reported total revenue of $423.14 billion, a 16% year-over-year increase, and net income of $166.44 billion, a 35% year-over-year increase. These results exceeded market expectations, leading to a 4.58% increase in Meta's stock price during after-hours trading on April 30, 2025.

Meta's CEO, Mark Zuckerberg, highlighted the company's strong start to the year, with over 3.4 billion daily active users across its family of apps. He emphasized Meta's commitment to investing in AI, focusing on five key areas: enhancing advertising, improving user experience, expanding business messaging, developing Meta AI, and advancing AI hardware. These investments are expected to drive innovation and growth in the company's business.

Zuckerberg also discussed the potential of AI to transform advertising, making it a scalable tool for delivering measurable business results. He noted that AI has already improved ad targeting and creative options, and that these improvements are expected to continue. Additionally, Zuckerberg highlighted the potential of AI to enhance user experience by providing more personalized and interactive content. He also mentioned the potential of AI to drive business messaging, with WhatsApp and Messenger already having over 30 billion and 10 billion monthly active users, respectively.

Meta's CFO, Susan Li, provided a detailed financial overview, noting that the company's total expenses for the first quarter were $248 billion, a 9% year-over-year increase. This was driven by higher infrastructure costs and payments to partners, partially offset by extended server usage. Research and development expenses increased by 22%, primarily due to higher employee compensation and infrastructure costs. Marketing and sales expenses increased by 8%, driven by higher professional service fees related to platform integrity work. General and administrative expenses decreased by 34%, primarily due to lower legal-related costs.

Li also noted that Meta's capital expenditures for the first quarter were $137 billion, primarily for investments in servers, data centers, and network infrastructure. The company's free cash flow was $103 billion, and it repurchased $134 billion in Class A common stock and paid $13 billion in dividends to shareholders. As of the end of the first quarter, Meta held $702 billion in cash and cash equivalents and had $288 billion in total debt.

Looking ahead, Meta expects total revenue for the second quarter to be between $425 billion and $455 billion, with a 1% positive impact from foreign exchange rates. The company also expects total expenses for the full year to be between $1.13 trillion and $1.18 trillion, and capital expenditures to be between $640 billion and $720 billion. These investments are expected to support the company's AI initiatives and core business needs.