Jeremy Bowen
Meta reported losing 20 million users in the first quarter of 2026. At the same time, they announced bigger investments in artificial intelligence systems worth billions of dollars. The difference between its trouble in keeping users and its focus on spending large amounts of money marks an important turning point for the social media company.
Meta’s group of platforms (Facebook, Instagram, Messenger, Threads, and WhatsApp) now has an average of 3.580 billion daily active people (DAP). For the first time in many recent quarters, growth saw a small drop of 0.56% compared with Q4 2025.
Meta says this drop occurred due to internet shutdowns in Iran and limits on WhatsApp access in Russia. As Mark Zuckerberg explained: “We saw a small drop in total family daily actives because of internet shutdowns in Iran and blocks in Russia, but apart from that, trends across our apps remain strong.”
A Big and Expensive Move Into Artificial Intelligence
This drop comes as Meta says it is raising its expected spending for 2026 to $125-145 billion, which is $10 billion more than earlier estimates. This higher spending is mainly because of rising component prices and extra costs for future data center space. This change comes after Meta’s chief financial officer, Susan Li, said during the investor call that Meta had “estimated our computing needs too low in the past.”
This plan creates an unusual situation in Meta’s business. In the past, social media companies treated user growth as the main metric that increased advertising income and company value. Meta’s choice to put AI system spending ahead of immediate efforts to keep users suggests the company is rethinking where future income will come from.
Revenue Rises Even With Platform Challenges
Meta’s revenue also saw its fastest growth since 2021, rising by 33 percent, from $42.3 billion last year to $56.3 billion this quarter.
Advertisers, who make up most of Meta’s income, now need to decide whether a smaller but more AI-improved user base can give better ad targeting and stronger results than a larger but less advanced audience. Early signs from the earnings call show that Meta is presenting its AI tools as a strength that can make up for fewer users.
Reality Labs Continues to Lose Money
Some parts of the company are still struggling. The Reality Labs division, which makes wearable devices and virtual reality products, reported an operating loss of $4.03 billion over the three-month period. This comes after Meta’s Reality Labs workers faced two rounds of job cuts since January.
Investor Doubts and Market Reaction
Meta’s stock price has dropped by more than seven percent since the earnings report was released.
The market’s reaction showed this concern clearly. Stock movement showed uncertainty about whether Meta’s AI spending is a smart long-term plan or an expensive distraction from the health of its main platforms. Expert opinions were divided; some saw the user loss as a short-term change, while others viewed it as a sign of deeper problems in Meta’s social apps.
Investors now face an important question. The loss of 20 million users quickly raised concerns about Meta’s ability to keep growing advertising income, which has long been the main driver of the company’s market value. At the same time, Meta’s large AI spending shows confidence in a future business model that depends less on total user numbers and more on advanced data use and prediction tools.
What Happens Next
Competitors may benefit from Meta losing users in the short term. Platforms such as TikTok, Snapchat, and newer social apps have often gained users moving away from Meta’s platforms. However, if Meta’s AI spending leads to better recommendation systems, stronger content checking, or improved advertising tools, the company could build a technical advantage that competitors may find hard to match.
A few things will decide whether Meta’s plan can last. The company’s ability to earn money from AI through better advertising products will be very important. Also, whether the drop in user levels out or grows larger in the coming quarters will show whether Meta’s main platform strength remains healthy or needs fast action.
Observers should watch Meta’s spending plans in future quarters, changes in user numbers across each platform, and any new product announcements that show real uses for the AI systems Meta is building.
