Meta Platforms (META) suffered its steepest single-day decline in six months on Thursday, with shares plunging roughly 10% and wiping out approximately $175 billion in market capitalization. The selloff came after the social media giant delivered better-than-expected first-quarter earnings but stunned investors by dramatically raising its 2026 capital expenditure forecast to as much as $145 billion, reigniting fears that the company's artificial intelligence spending is spiraling without a clear path to monetization.
The Menlo Park, California-based company reported Q1 revenue of $56.3 billion, up 33% year-over-year, and earnings per share of $10.44 that crushed analyst estimates of $6.65. Meta also reported operating income of $22.9 billion with a 41% operating margin. Yet the strong results were overshadowed by the company's updated capital spending outlook, which now calls for $125 billion to $145 billion in 2026 capex, up from prior guidance and nearly double the $72.2 billion spent in all of 2025.
How the Selloff Unfolded: Inside Meta's Q1 Earnings Shock
Meta reported its quarterly results after the bell on Wednesday, April 29. While the headline numbers appeared strong, the focus quickly shifted to the company's capital expenditure trajectory. CFO Susan Li told analysts on the earnings call that Meta had "continued to underestimate" its compute needs, justifying the $10 billion increase in the upper end of the capex range.
"We had a milestone quarter with strong momentum across our apps and core AI investments," Li said, according to the earnings release. But the market was not convinced. Shares fell more than 6% in after-hours trading before accelerating losses in the regular session on Thursday.
The sell-off deepened when JPMorgan downgraded the stock, citing concerns that the elevated spending levels may not deliver proportional returns. Adding to the pressure, CEO Mark Zuckerberg acknowledged that rising AI infrastructure costs contributed to the company's decision to cut approximately 8,000 jobs, and declined to rule out further layoffs.
"Compute costs are crowding out headcount," Zuckerberg reportedly said, according to a Reuters report. Meta's total 2026 expense guidance remained unchanged at $162 billion to $169 billion, meaning the company is making aggressive trade-offs between infrastructure investment and staffing.
Timeline: How Meta's Capex Story Developed Over 18 Months
October 2024: Meta first signals rising AI spending, with 2024 capex coming in around $37 billion. The stock initially dips but recovers as revenue growth accelerates.
January 2026: Meta reports Q4 and full-year 2025 results. Revenue hits $59.9 billion in Q4 alone. Full-year 2025 capex lands at $72.2 billion. The company guides for 2026 capex in the range of $100-115 billion. Stock initially rises.
April 29, 2026: Meta reports Q1 2026 results. Revenue of $56.3B beats estimates. EPS of $10.44 crushes forecasts of $6.65. But the company raises 2026 capex guidance to $125-145 billion, up $10 billion from the prior high end.
April 30, 2026: Stock opens sharply lower, falling as much as 10.5%. Approximately $175 billion in market value evaporates. Trading volume surges to 48.4 million shares. JPMorgan issues a downgrade. Shares close at $611.91, down 8.55% on the day.
May 1, 2026: Zuckerberg confirms 8,000 job cuts tied to AI spending. Analysts publish mixed reactions, with some calling the selloff a buying opportunity and others warning of further downside.
Why Meta's AI Spending Spree Matters: Expert Analysis and Investor Impact
The central tension driving Meta's stock collapse is the gap between the company's spending trajectory and its ability to demonstrate a clear return on those investments. Meta has already lost over $80 billion on its Reality Labs division, which encompasses the metaverse and augmented reality efforts. Now, investors are questioning whether the AI spending binge will follow a similar pattern.
"Meta is growing faster than it has in years, so why is its stock plummeting?" Investopedia asked in a headline that captured the market's confusion. The answer lies in the scale of the spending — the midpoint of Meta's 2026 capex guidance represents nearly double what the company spent in all of 2025.
Some analysts argue the spending is necessary. Meta's average price per ad increased 9% year-over-year in Q1, and AI-driven recommendation algorithms are boosting engagement across Facebook, Instagram, and WhatsApp. Daily active people across Meta's family of apps remained above 3.3 billion despite a reported 20 million user drop attributed to internet disruptions in Iran.
"Meta's core business remains incredibly strong," wrote a Motley Fool analyst. "Revenue grew 33% and margins are expanding. The question is whether the AI bet will pay off before investor patience runs out."
Others are more cautious. Bloomberg reported that the capex increase "reignited fears that its investments are not helping it catch up to rivals in the AI race." Unlike Microsoft and Google, which can monetize AI through cloud services, Meta's AI investments are primarily focused on internal efficiency and recommendation systems, with a longer and less certain path to direct revenue generation.
Where Things Stand Now: Latest on Meta Stock and Company Response
As of the close on April 30, Meta stock was trading at $611.91, down 8.55% on the day and roughly 5% year-to-date. The stock had rallied 17% in April before Thursday's slide erased those gains and then some. The 52-week range sits at $520.26 to $796.25, suggesting the stock still has significant upside from current levels if the company can demonstrate progress on AI monetization.
Meta's response has been twofold. On one hand, the company is defending its spending as essential for long-term competitiveness. On the other, it is cutting costs elsewhere — the 8,000 layoffs represent approximately 8% of Meta's workforce, following the 21,000 jobs cut in 2023 during what Zuckerberg called the "year of efficiency."
The company also faces legal headwinds, warning investors of a possible "material loss" related to lawsuits over youth social media use. Several state attorneys general have filed suits alleging that Meta's platforms harm children's mental health.
What Happens Next: The Road Ahead for Meta Investors
Meta's next major catalyst will be its Q2 2026 earnings report, expected in late July. In the meantime, investors will be watching several key indicators: user growth trends, ad revenue momentum, and any signs that AI investments are translating into measurable financial returns.
Some analysts see opportunity in the pullback. Benzinga noted that historical patterns show Meta's rare double-digit drops have averaged 57% returns over the following 12 months. The company also initiated a quarterly dividend of $0.52 per share in March 2026, providing a modest 0.34% yield.
But the core question remains: Can Meta convince investors that its AI spending is different from its metaverse spending? Zuckerberg has staked the company's future on the bet that AI infrastructure will unlock a new wave of growth across advertising, recommendation systems, and potentially new products. For now, Wall Street is demanding proof — and the $175 billion one-day selloff suggests patience is wearing thin.
The Bottom Line: Key Points to Remember
- Meta beat Q1 2026 estimates with $56.3B revenue (+33% YoY) and EPS of $10.44, but raised 2026 capex guidance to $125-145B
- Stock dropped ~10% on April 30, erasing $175B in market cap — the worst single-day loss in six months
- JPMorgan downgraded the stock; Zuckerberg confirmed 8,000 layoffs tied to AI infrastructure costs
- Total 2026 expense guidance of $162-169B unchanged, meaning cost cuts in workforce offset capex increases
- Investors divided on whether the selloff represents a buying opportunity or a warning sign of unchecked spending
