Meta Earnings: With Billions Poured Into AI, Margin for Error Is Shrinking

Meta’s (NASDAQ:) Investors would be eyeing updates on sales, profits, user engagement, and advertising prices, with the main focus on artificial intelligence initiatives. META is the fourth-largest AI spender in 2025.

Key Highlights

• Meta’s growth strategy centers on aggressive expansion in artificial intelligence, exemplified by the recent launch of Llama 4 AI models with advanced multimodal capabilities. The company is making substantial infrastructure investments, planning to expand its computing capacity to over 2 million GPUs by FY26.
• META additional opportunities include the anticipated launch of Ray-Ban Meta glasses with display capabilities in 2025 and continued AI monetization across its platforms.
• The integration of AI across Meta’s platforms has shown promising results, with MetaAI reaching over 1 billion monthly active users, potentially leading to increased user engagement and more effective monetization opportunities.
• Projected operating expenses of $110-$115 billion for FY25 represent a significant increase, potentially pressuring profit margins in the short to medium term.
• High CapEx guidance of $60-$65 billion for 2025 indicates prioritization of long-term growth over immediate profitability, which may concern investors about maintaining high profit margins.

META Q1 2025 earnings after-market Wednesday April 30, 2025

Analyst Ratings

Earnings Expectation

Financial Health History

Financial Health for Meta Platform is determined by ranking the company on over 100 factors against companies in the Communication Services sector and operating in Developed economic markets.

Option Statistics

Put/Call ratio suggests the following three scenarios:

• With Put/Call ratio between 0.7207 to 0.5235 for the next four upcoming expiries suggest that the overall option traders’ position is inclined towards Calls.
• Lower earnings and guidance could trigger a sharp dip lower.
• Better-than-expected guidance would trigger a gradual rise.
• Option market is showing a large net positive Gamma at 597.50 strike versus a large net negative gamma exposure at 502.50 strike over the spectrum of April 2025 to Jan 2027.

Technical Analysis Perspective

• META lost all its post US election gains. Stock moved from 555.17 (Nov 04, 2024) to 741 (Feb 10, 2025), slipped lower to 479.80 last week before staging a strong rebound to 558.49 Tuesday April 29, 2025 .
• The recent decline is a retest attempt to July 2024 previously highest range between 540-494.
• Technically, such a retesting attempt at the previous all-time high is a healthy sign paving the way for a fresh rally in coming months.
• Stock tends to hover inside rising and falling channels. A breakout of the channel indicates a major top or bottom is in place.
• META has penetrated a falling channel resistance this week, which is sitting around 540/528 acting as a key support ahead of the earnings on April 30, 2025.
• Earnings are a good catalyst for the clarity of future direction which in this case suggests that prices should hold 540/528 band to trigger a rally to 615/620.
• A decisive break below 540/528 would eye 500/480 base.

Weekly Candlestick Chart

TSLA Seasonality Chart

• META closes 4.4% higher in April 62% of the time since 2012.

Conclusion

META needs to hold 540/528 post earnings to initiate a rally to 615/620. A strong penetration below 540/528 would eye 500/480 support zone.

To stay ahead of such key levels and market shifts, whether you’re a novice investor or a seasoned trader, leveraging InvestingPro can unlock a world of investment opportunities while minimizing risks amid the challenging market backdrop.

Subscribe now and instantly unlock access to several market-beating features, including:

• ProPicks AI: AI-selected stock winners with proven track record.
• InvestingPro Fair Value: Instantly find out if a stock is underpriced or overvalued.
• Advanced Stock Screener: Search for the best stocks based on hundreds of selected filters, and criteria.
• Top Ideas: See what stocks billionaire investors such as Warren Buffett, Michael Burry, and George Soros are buying.

***

Ali Merchant is a seasoned financial market professional with expertise in Technical Analysis, Treasury & Capital Markets, Trading, Sales, Research, Training, Fund & Relationship Management, Fintech, and Digitalization. He is a CMT charter holder and an active member of CMT Association, USA, American Association of Professional Technical Analysts, and CMT Association of Canada. He has worked on various roles and organizations in North America and the GCC, such as ABN Amro bank, Thomson Reuters, Refinitiv, MAK Allen & Day Capital Partners, and Bridge Information Systems.

He is the founder of TwT Learnings, provides financial market training. Follow us on “X” formerly Twitter “@twtlearning.”