Meta’s AI Payoff Is Getting Lost in the Capex Debate

Gene Munster, Brian BakerMay 1, 2026

Meta’s March quarter rhymed with results over the past year in that they have shown that AI is already having a meaningful impact on growth. March revenue was up 33% y/y, compared to March of 2025, which was up 16%. It's clear that Meta and Google are the two best examples of AI's impact on a business at scale. Despite all of the positives around AI driving higher growth, shares of META traded down 7% on capex guidance that was 7% higher than what they projected three months ago. That translates to CY26 capex likely being up 93% y/y. While the current view is to be negative on more capex for companies that don't have a cloud business, I believe over time investors will change their view and will reward Meta for their infrastructure investments, given it increases the chances that they can grow revenue higher for longer.

Key Takeaways

Revenue growth is off the charts, with March up 33% y/y and June guidance implying 28% y/y growth at the high end.

Investors are focused on the calendar 2026 capex guide, which came in above Street expectations.

Meta remains one of the best positioned AI companies, given its reach, ad tools, and ability to increase engagement across its apps.

Revenue Strength

The company reported 33% y/y revenue growth in March, slightly ahead of the 32% whisper number. For June, management guided to 28% y/y growth at the high end of the range, ahead of the Street at 25%. A year ago, in March of 2025, Meta’s advertising business grew at 16%, which is testimony that AI is not just a future cost center for Meta, but is already improving the core business.

The specifics as to why these AI investments have yielded higher revenue growth are that the company is using AI to improve ad targeting, creative tools, ranking, and engagement.

Capex Pushback

If you take the high end of guidance, Meta is now calling for calendar 2026 capex growth of 93%, compared to their capex guide three months ago calling for an 80% increase. As a point of perspective, the Street was looking for 73% growth. The topic of how much these companies should be spending on capex is a well-traveled debate since the Sep-25 earnings season. That’s when we saw shares trade down 15% on news that Meta raised the high end of its capex outlook for full year 2025 by 3%, but signaled that 2026 would be “notably larger” than the increase seen in 2025. Given Meta is not a hyperscaler, that increased investment was met with concern.

On the most recent March earnings call, the company increased capex by about 7%, which, as mentioned, bumps the high end of capex growth this year from 80% to 93%. The 7% decline in META share price underscores investors’ appetite for increased spend.

Meta Is Still in a Great Place

Investors are missing the point. Meta and Google are the two best-positioned public companies to scale the benefits from AI. SpaceX, building sovereign AI, is better positioned than either of those companies, but they remain in the private market. In Meta’s case, the benefit is showing up in higher revenue growth, better engagement, and a widening set of AI tools across the ad platform.

My bottom line is don’t overthink this. While Meta is not a hyperscaler and does not have a direct benefit from the increase in AI capex, the company has shown over the past year that they know what they’re doing when it comes to investing in AI. That shows up in DAUs growing 4% y/y, now at 3.6B, and ad growth stepping up to a new range of 20-30% compared to 10-20% previously.

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