What you need to know
- Meta reported record earnings growth for the first quarter of 2026, with the company reporting 33% year-over-year revenue of $56.31 billion.
- Meta’s spending also grew significantly, at $33 billion from January 1, 2026 to March 31, 2026, up 35% from this time last year.
- Meta has signaled that its costs will continue to rise due to global component problems, now estimated at $125 billion to $145 billion for the year.
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Much of the uncertainty stems from two big issues: massive infrastructure spending, exacerbated by this year’s dire component supply shortages and rising costs, as well as investors’ “unclear strategy.“
Meta now says the cost of AI development could rise to $30 billion this year, up from the initial low estimate. Jesse Cohen, senior analyst at Investing.com noted, “Meta’s earnings growth was overshadowed by a Capex surprise. Investors are digesting the reality that Meta’s ambitious AI ambitions come with a hefty price tag that will pressure profitability in the near term.”
Although the company’s Meta Quest, Ray-Ban and Oakley AI glasses made good progress in the market, annual revenue fell by $10 million. Meta has a strong foothold in these markets and currently has little competition in VR or AI glasses, but companies like Samsung is set to debut its new AI glasses this year.
But revenue growth for those products has been surprisingly slow, spooking investors over the past few years as Meta has spent tens of billions on R&D for its AR and VR products. During the call, Meta specifically cited lower-than-expected Quest sales as one of the reasons for the decline.
“The critical threshold will be if we see consistently increasing Capex coincide with slowing revenue growth,” Cohen said. “If that happens, the story will permanently shift from ‘building the future’ to ‘burning money with a speculative vision’ with no guarantees.”
That last part is the real threat, as Meta hopes to avoid another Reality Labs debacle, where investors have been talking about “losses” every quarter despite Zuckerberg’s vision of AR and VR as the future of computing.
Adoption of Android Central
Meta debuted Meta Spark, its new closed-source artificial intelligence agent, just before the earnings call for a reason. Zuckerberg noted that his “view of AI is very different from others in the industry,” noting that AI should enhance what you want to do rather than replace humans. “People are going to be more important in the future, not less,” Zuckerberg made clear during the earnings call.
But I’m not entirely on board with his vision, and it’s based on the company’s actions over the past few years. Although Meta’s 77,986 employees are 1% more than the same period last year, the company spent a significant amount of thought with massive public cuts. Even though more people are clicking on the company’s ads than ever before, the public opinion of its physical products seems lower than ever due to these actions.
Meta is very much a Silicon Valley company, and that means it moves fast, breaks things often, and abandons anything that doesn’t work right away. The massive changes made with the Meta Quest headset have left the VR community more uncertain than ever, and there is real concern that this fear could affect the company’s future endeavors if it continues on its current path.
