Meta Rallies As Tech Giant Boosts AI Spending As Advertising Outlook Looks 'Healthy' Despite Tariffs

Meta Platforms (META) stock rallied Thursday as the social media giant's first-quarter results and sales outlook eased fears about tariffs squeezing its advertising business. Mark Zuckerberg also indicated its full-speed ahead for the Facebook parent company's significant AI investments.

Meta said late Tuesday that it earned $6.43 per share on sales of $42.3 billion for the March-ended quarter. Analysts polled by FactSet projected the Menlo Park, Calif.-based company would post adjusted earnings of $5.23 per share on sales of $41.3 billion.

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Sales increased 16% year-over-year. Earnings increased 37% to $6.43.

Meta guided for $44 billion in sales for the June quarter, at the midpoint of its range. That was slightly ahead of analyst estimates for $43.8 billion in Q2 sales prior to the report.

The sales guidance is helped by a 1% currency tailwind from a weakening dollar. Still, the outlook likely helps ease some concerns about how tariffs and the end of the de minimis import exemption for Chinese goods will hit Meta's advertising business. Chinese e-commerce companies Temu and Shein are beneficiaries of the de minimis exemption and also big advertisers on Facebook and Instagram.

"We've had a strong start to an important year, our community continues to grow and our business is performing very well," Zuckerberg, Meta's Chief Executive, said in a news release. "We're making good progress on AI glasses and Meta AI, which now has almost 1 billion monthly actives."

On the stock market today, Meta stock rose nearly 7% to 587.30 in recent premarket trading.

Meta Pushes Ahead With Big AI Spending

Meanwhile, Zuckerberg is not backing away from Meta's big spending on AI. Meta increased its guidance for capital expenditures in 2025 to $68 billion at the midpoint. The tech giant told investors in January that it planned to spend $62.5 billion on 2025 capex, at the midpoint of its range.

The spending "reflects additional data center investments to support our artificial intelligence efforts as well as an increase in the expected cost of infrastructure hardware," the company said in its news release.

Zuckerberg told analysts Wednesday that AI is "transforming everything we do." He added that the company is focused on utilizing AI to improve its ad business, boost user engagement, grow messaging services for businesses and develop AI devices.

"Even with our significant investments, we don't need to succeed in all of these areas to have a good ROI (return on investment)," Zuckerberg said on the conference call. "But if we do, then I think that we will be wildly happy with the investments that we are making."

On the other hand, the Facebook parent company lowered its expectations for total 2025 expenses to $115.5 billion, $1 billion lower than the midrange of its previous guidance.

Meta Stock: Family of Apps Users Up 6%

Meta was a 6% year-over-year increase in "daily active people," the metric the company uses to track total users of Facebook, Instagram, WhatsApp and its others apps.

Ad impressions delivered across Meta's apps increased 5% year-over-year while the average price per ad on Facebook and elsewhere increased 10%.

That helped power a 16% revenue increase for Meta's "Family of Apps" business, to $41.9 billion. Meta's other division, the metaverse-focused Reality Labs, has $412 million in sales, down 6% from a year earlier.

Chief Financial Officer Susan Li told analysts Wednesday that the company's sales outlook for Q2 reflects ad trends that have "generally been healthy" so far in April, despite concerns tariffs will weigh down advertising.

"We have seen some reduced spend in the U.S. from Asia-based e-commerce exporters, which we believe is in anticipation of the de minimis exemption going away on May 2,"  Li said on the conference call. "A portion of that spend has been redirected to other markets, but overall spend for those advertisers is below the levels prior to April."

Analysts Raise Meta Stock Targets

Meta shares had fallen 6.1% this year entering Thursday, compared to a 5.3% year-to-date slide for the S&P 500.

Analysts expect the results will help push Meta higher. Oppenheimer analyst Jason Helfstein increased his price target for Meta stock to 665 and reiterated an outperform call.

"Investors get the trifecta," Helfstein wrote to clients Wednesday, with Meta guiding to second quarter sales that were "meaningfully better than feared," decreasing fiscal year expenses by $1 billion and increased capex based on its AI outlook.

Further, Evercore ISI analyst Mark Mahaney upped his price target to 750 from 725 and reiterated an outperform call for Meta stock.

"Meta is facing some dramatic macro uncertainties in (2025), and the capex/investment pace is very aggressive, but the company is doing this from a clear position of strength," Mahaney wrote Wednesday. "A robust online ads market, strong user and engagement growth, ramping monetization, and excellent execution are all on display."

Coming into the report, Meta stock had an IBD Composite Rating of 86 out of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.

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