The company, which reported its first-quarter results Wednesday afternoon, exceeded analyst expectations on both net income and revenue, which stood at $26.8 billion (partly boosted by a one-time $8 billion tax benefit) and $56.3 billion, respectively, according to a filing with the Securities and Exchange Commission. Meta also saw a 33% revenue increase compared to the same quarter last year, its biggest year-over-year increase in five years.

Yet investors apparently paid more attention to the bad news.

The company recorded 20 million fewer global users for its family of apps in the first quarter compared to the previous three months, a setback that Meta’s chief financial officer, Susan Li, blamed on “internet disruptions in Iran, as well as a restriction on access to WhatsApp in Russia.” Still, Li said the company recorded more than 3.5 billion daily active users across its app portfolio, which includes Facebook, Instagram, and WhatsApp, and that without the disruptions in Iran and Russia, daily active users for its family of apps would have been positive quarter over quarter. Meta has not yet responded to Fortune’s request for comment.

Maybe the bigger problem, though, was the company’s expected capital spending, much of which is due to the company’s increasing focus on AI, which jumped by almost $10 billion to between $125 billion and $145 billion. Li said on Wednesday’s earnings call that the new predicted expenditures were necessary because “we have continued to underestimate our compute needs even as we have been ramping capacity significantly, as the advances in AI have continued and our teams continue to identify compelling new projects and initiatives.” 

Notably for Meta, the company also reported Wednesday that it has continued to pour billions of dollars into the metaverse. In the first quarter, the company’s metaverse and virtual reality division, Reality Labs, reported an operating loss of $4.03 billion, even as the company has been laying off employees across multiple rounds in 2026, including a 10% cut to Reality Labs’ roughly 15,000-person workforce. Meta said earlier this month it would lay off 10% of its overall workforce, or about 8,000 employees. The company has lost approximately $80 billion on its Reality Labs since it started breaking out its results in late 2020. 

While Meta’s stock sank, Alphabet’s stock hit an all-time high Thursday and closed up more than 9% while it also raised its capital expenditure expectations. The company said it now expected to spend between $180 billion and $190 billion, up from its last estimate of between $175 billion and $185 billion. 

Matt Britzman, an analyst with U.K.-based investment platform Hargreaves Lansdown, wrote in a Thursday note that investors were more mixed than previously on AI spending. 

“The market was less united on what to make of the spending plans, with investors still trying to balance the scale of the AI opportunity against the cash required to chase it,” he wrote.

As for Meta, Britzman said while investors are focusing on costs they may miss the company’s strong fundamentals, including its advertising momentum and AI advances that improve monetization.

“Meta still looks like one of the clearest examples of heavy investment translating into returns for its core business,” he wrote.