• Meta Platforms surged 6.3% in premarket trading after reporting better-than-expected first-quarter earnings and revenue.
  • The strong results reflect resilient advertising demand and early monetization gains from AI-driven tools.
  • Management issued an optimistic second-quarter revenue outlook, fueling investor confidence.

Meta Platforms Inc. shares soared 6.3% in premarket trading Thursday, following a robust first-quarter earnings report that beat analyst estimates. The social media giant posted earnings per share of $5.06, surpassing the consensus forecast of $4.67, while revenue climbed 27% to $37.1 billion, exceeding expectations of $36.2 billion. The results were underpinned by a 26% increase in advertising revenue, as businesses continued to spend heavily on Meta's platforms.

"We've had a solid start to 2024, and our AI investments are starting to pay off," said Chief Financial Officer Susan Li in a statement. The company highlighted early success from its AI-powered ad tools, which are helping advertisers improve campaign performance. Chief Executive Officer Mark Zuckerberg emphasized the company's long-term focus on AI, noting that "we're building towards a future where AI helps people create, connect, and discover new things."

Investors responded enthusiastically, with Meta's stock climbing as high as $545 in premarket trading, up from Wednesday's close of $512.50. The upbeat sentiment comes despite ongoing regulatory scrutiny and privacy changes in the digital advertising industry. Analysts at JPMorgan Chase & Co. called the quarter a "home run," pointing to sustained user growth across Facebook and Instagram.

Looking ahead, Meta projected second-quarter revenue of between $39.1 billion and $41.3 billion, above the average analyst estimate of $39.2 billion. The guidance factors in continued strength in advertising and potential currency headwinds. The company also announced a $50 billion share buyback program, further boosting investor optimism.

While the metaverse segment remains a cost center, with Reality Labs reporting operating losses of $3.8 billion, the core advertising business continues to generate strong cash flows. Meta's capital expenditures for 2024 remain unchanged at $35-37 billion, with the majority allocated to AI infrastructure.

Correction: An earlier version of this article incorrectly stated Meta's quarter-over-quarter revenue growth figure; it has been corrected to reflect a 27% year-on-year increase.