Meta Platforms Q1 Earnings Preview: 'Marginally Cautious,' AI Opportunity Could Prove 'First Mover Advantage'

Social media and technology company Meta Platforms Inc META will report first-quarter financial results after market close Wednesday, April 24.

Here are the earnings estimates and what analysts are saying ahead of the report.

Earnings Estimates: Analysts expect Meta Platforms to report first-quarter revenue of $36.16 billion, according to data from Benzinga Pro.

The company reported revenue of $28.65 billion in last year's first quarter. Meta Platforms has beaten revenue estimates from analysts in six straight quarters.

Guidance from Meta Platforms for the first quarter calls for revenue to be in a range of $34.5 billion to $37.0 billion.

Analysts expect the company to report earnings per share of $4.32 in the first quarter, compared to $2.20 in last year's first quarter. The company has beaten analysts' estimates for earnings per share in four straight quarters.

Related Link: Zuckerberg Vs. Musk: Billionaire Battle Sees Meta Platforms Rejoin $1 Trillion Market Cap Club Before Tesla

Roth on META: With Meta Platforms shares up 36% year-to-date, Roth analyst Rohit Kulkarni said there are great expectations for the company's earnings report.

The analyst, who had a Buy rating and $500 price target, said buyside expectations could be "overly ambitious" and he remains cautious.

"We are marginally cautious heading into 1Q earnings as '24 quarterly revenue cadence under tougher YoY comps, incremental growth drivers, and impact from European regulations are big unresolved debates among investors," Kulkarni said.

The analyst said investors could be expecting a beat and raise quarter from Meta Platforms with revenue higher than $37 billion and guidance for the second quarter to be announced at around $39.5 billion.

Kulkarni called European regulations an unknown that is tricky to predict currently.

"We will monitor developments closely as early enforcement actions become more apparent over the next couple of months."

The analyst said comps get tougher for Meta Platforms in the second quarter and beyond, which could make the stock returning to all-time highs tough.

Benchmark on META: The impact of China-based advertisers and Reels monetization are key areas of topic for Benchmark analyst Mark Zgutowicz.

The analyst had a Hold rating and no price target on the stock.

"Given China-based advertisers drove nearly 1/3 of Meta's '23 ad growth and our more modest ‘24E contribution, we assume ‘24E core (non-China) ad growth accelerates," Zgutowicz said.

The analyst also highlighted Meta's recent increased artificial intelligence capabilities with version 2 of Meta AI rolled out. This includes posing questions to the AI assistant on WhatsApp and Messenger and providing information on posts and videos on Facebook and Instagram.

"We expect these and other use cases will be elaborated on the call."

The analyst said that the investment in data center and GPU capital could be increased given the new capabilities of artificial intelligence for the company.

JMP on META: The use of artificial intelligence within the Meta family of apps could be the first generative AI experience that some users have, JMP analyst Andrew Boone said.

"Meta is leaning into high user engagement across its family of apps to create an adjacent service with Meta AI, similar to how it launched short-form video with Reels," Boone said.

The analyst, who has a Market Outperform rating and $550 price target, said the large opportunity for Meta "is to take share of search queries." This could lead to more data to use in personalized ads.

Boone said the new AI could lead to Meta being in an investment cycle for data centers and AI talent.

"AI unlocks new areas of engagement, data, and monetization."

The analyst said data from Pew Research from February 2024 showed that 23% of U.S. adults have used ChaGPT, which means Meta's AI tools could be the first time many of its users experience generative AI.

"With AI chats likely more personalized over time as models improve and learn from past interactions, there may be a first mover advantage that Meta can capture."

Boone said the opportunity for Meta is additional searches, which has potential for more monetization.

META Price Action: Meta shares are up 2.88% to $495.02 on Tuesday versus a 52-week trading range of $207.13 to $531.49. Shares of Meta are up over 130% in the last year.

Read Next: Microsoft, Meta Reveal Limited Edition Meta Quest VR Headset With Game Pass Bundle‘

Photo: Shutterstock