Meta Platforms Q1 Earnings: Mark Zuckerberg Just Shattered the “AI Bubble” Narrative

Meta Platforms (META) released its Q1 2025 earnings yesterday, April 30, after the close of markets. The company beat on both the top line and bottom line and provided upbeat guidance for the current quarter, which has helped catapult the stock higher today. In this article, we’ll examine Meta’s Q1 earnings and how the company is progressing in its artificial intelligence (AI) initiatives, shattering the “AI bubble” narrative. 

Meta Q1 Earnings Analysis

Meta Platforms reported revenues of $42.31 billion in Q1, up 16% year-over-year and ahead of the $41.24 billion that analysts were expecting. The company’s earnings per share (EPS) rose 37% year-over-year to $6.43 and easily surpassed the $5.22 that analysts were modelling. Meta forecast Q2 revenues between $42.5 billion to $45.5 billion, the midpoint of which is in line with consensus estimates.

There were concerns over the changes in the de minimis rule taking a big toll on Meta’s revenues after both Snap (SNAP) and Alphabet (GOOG) listed it as a headwind during their recent earnings calls. Meta acknowledged that the ad spend from Asia-based e-commerce exporters has come down in anticipation of these changes. It said that while some portion of that “spend has been redirected to other markets … overall spend for those advertisers is below the levels prior to April.” CFO Susan Li, however, emphasized, “Our Q2 outlook reflects the trends we're seeing so far in April, which have generally been healthy.”

I wasn’t too bullish on Meta heading into the Q1 confessional given the macroeconomic headwinds, particularly from China-based advertisers. However, the company delivered a strong set of numbers and topped that up with upbeat guidance. The company navigated the challenges well, and as CEO Mark Zuckerberg said during the earnings call, “Our business is also performing very well, and I think we’re well positioned to navigate the macroeconomic uncertainty."

Key Takeaways from Meta’s Q1 Earnings Call

Here are some of the other key takeaways from Meta's Q1 earnings report.

• The monthly active user count of Threads swelled to 350 million, and Zuckerberg said that it is “on track to become our next major social app.”
• The Meta AI digital assistant monthly user count is now almost 1 billion, which is significantly higher than the 700 million the company touted during the Q4 2024 earnings call.
• Meta raised its 2025 capex guidance to between $64 billion and $72 billion compared to the previous guidance of $60 billion to $65 billion. The higher guidance is on account of increased outlay toward data centers.
• However, the company lowered its 2025 total expense guidance by $1 billion to $113 billion to $118 billion.

Meta Touts Its AI Capabilities

The biggest takeaway for me was the emphasis on AI during the earnings call. Zuckerberg began his commentary by talking about AI, and that was pretty much the focus throughout the earnings call. For context, “Meta AI” popped up 23 times during the earnings call. Moreover, all analyst questions were centered around “AI” and even in the odd question about the Reality Labs segment, management’s response revolved around the AI strategy.

Early in his comments, Zuckerberg said, “AI is transforming everything we do.” While other major tech companies are either maintaining their AI capex guidance or else guiding for spending to taper down in the future, as Microsoft (MSFT) did, Zuckerberg said, “We continue to increase our investments and focus more of our resources on AI.”

He listed the various ways in which AI will benefit Meta. First, Zuckerberg said that it will lead to “improved advertising,” which in a nutshell means more effective targeted ads. Second, Zuckerberg said that AI is leading to better engagement for users through better recommendations and enabling better content.

Zuckerberg listed business messaging as a third growth opportunity and said that AI would help increase penetration of its business messaging service in countries with higher labor costs.

The fourth opportunity he discussed is Meta AI. As previously stated, the total number of users using Meta AI is already around 1 billion. Zuckerberg is quite optimistic about Meta AI and said, “This is going to be one of the most important and valuable services that has ever been created.” Notably, the company has also launched Meta AI as a standalone app.

Finally, Zuckerberg said that AI devices like glasses will drive the company’s growth in the future. He said that over a billion people globally wear glasses and “it seems highly likely that these will become AI glasses over the next five to 10 years.”

Overall, even as the AI euphoria has subsided, Meta’s Q1 earnings call is testimony to the fact that AI is not a bubble like the dot-com days, as a section of the market fears. I continue to believe that Meta remains among the best AI plays out there, even as the trade is no longer as hot as it was until 2024.