Meta Platforms (META) Q1 results exceeded expectations and helped ease investor concerns tied to ad demand and macro pressures, Wedbush Securities said in a note Thursday.

The firm said sentiment had turned cautious ahead of the release due to signs of softening ad demand, US consumer caution, and a potential pullback in spending from China-based retailers amid tariff risks and changes to US import rules.

Despite these headwinds, Wedbush said the company delivered a strong quarter, with upside driven by higher ad pricing, disciplined expense growth, and AI-led gains in engagement across Facebook and Instagram. Operating income came in about $2.2 billion above the Street, with margins expanding year over year to 41.5%.

Meta's Q2 revenue guidance, which incorporates continued weakness in ad spending from China, was in line with expectations and indicates underlying resilience, the firm said.

Full-year expense projections were lowered versus prior guidance, while 2025 capital expenditures were raised to a range of $64 billion to $72 billion. Wedbush said the increase reflects growing AI infrastructure needs and healthy demand in the core business.

AI-driven enhancements across Meta's ad stack and content recommendations are already boosting engagement on Facebook and Instagram, supporting monetization potential across apps, advertiser tools, and hardware, according to the note.

Wedbush raised its price target on Meta's stock to $750 from $680 and reiterated its outperform rating

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