Revenue jumps 16% as Meta raises capex forecast to support AI infrastructure; European regulatory risks flagged
Meta Platforms (NASDAQ:META) shares climbed more than 5% in after-hours trading on Wednesday after the social media giant posted stronger-than-expected earnings and outlined ambitious new investments in artificial intelligence infrastructure.
For the first quarter of 2025, Meta reported revenue of US$42.3bn, up 16% year-over-year, and earnings per share of US$6.43, far ahead of analyst expectations of US$5.28. Net income rose 35% to US$16.64bn, boosted by robust advertising demand and continued user growth across its platforms.
“This has been a strong start to an important year,” said CEO Mark Zuckerberg, pointing to growth across the company’s product lines and steady progress on AI initiatives. Daily active users reached 3.43 billion, beating forecasts and up from 3.35 billion in the previous quarter.
AI pushes capex higher
Meta revised its 2025 capital expenditure forecast upward, now expecting to spend between US$64bn and US$72bn, compared to its prior range of US$60bn to US$65bn. The increase reflects “additional data center investments to support our artificial intelligence efforts” and rising hardware costs, according to the company’s earnings release.
Zuckerberg noted that Meta AI, the company’s in-house generative assistant, has grown to nearly 1 billion monthly active users, up from 700 million in January. He hinted at future monetisation, saying the company would explore paid premium versions—but not until the product is more mature.
Threads, Meta’s Twitter-style microblogging platform, now boasts 350 million monthly users, up from 320 million in January. Ads have recently been rolled out to all eligible advertisers globally, though CFO Susan Li said they won’t meaningfully contribute to revenue in 2025.
Advertising remains core engine
Meta’s advertising revenue reached US$41.4bn in the quarter, surpassing analyst expectations of US$40.4bn. Growth was broad-based, though Asia-Pacific ad revenue slightly missed forecasts, coming in at US$8.2bn versus an expected US$8.4bn.
The company’s Reality Labs division, which handles AR/VR hardware and metaverse-related initiatives, posted a US$4.2bn operating loss, slightly less than anticipated. Sales fell 6% year-over-year to US$412 million.
Europe looms as regulatory flashpoint
Meta flagged a potential hit to its European business in the second half of the year following a European Commission ruling that its no-ads subscription model may breach regulatory requirements. The company warned of a “significant impact” on user experience and revenue in the region as early as Q3.
The update comes as Meta remains embroiled in a U.S. antitrust trial over its acquisitions of Instagram and WhatsApp, further heightening scrutiny of its platform strategy.
Outlook and risks
Meta projected Q2 revenue between US$42.5bn and US$45.5bn, well above Wall Street’s consensus of US$44.03bn. At the same time, the company trimmed its overall 2025 expense guidance to a range of US$113bn to US$118bn.
While Meta continues to outpace expectations, analysts remain cautious. “Meta’s enormous investment in AI infrastructure will continue to weigh heavily on investors,” said Debra Aho Williamson of Sonata Insights, noting that the company doesn’t plan to monetise AI aggressively this year.
Amid macroeconomic uncertainty and the fallout from new U.S. tariffs, Meta’s ability to sustain momentum will likely hinge on whether its AI products deliver durable engagement—and whether regulatory pushback can be contained.