Meta Narrows Advertising Gap With Google as Wall Street Backs Alphabet

Meta continues to narrow the gap with Google in the advertising market, yet investment analysts remain more bullish on Alphabet shares.

During the second quarter, Meta generated $59.36 billion in advertising revenue, a 27% increase, according to its regulatory filing. Alphabet reported $63.27 billion from its Google Search and other category, up 17%, per its earnings release. The revenue difference between the two companies now stands at $3.9 billion, less than half of what it was a year earlier.

“Meta arguably has seen the largest impact from AI on ad growth and is on track to surpass Google Search this year,” Bernstein analyst Mark Shmulik wrote.

Bernstein's analysis indicates Meta captured almost half of all incremental digital advertising spending in the period. The company's AI tools are improving ad recommendations and targeting, leading to a 14% rise in ad volume and a 12% increase in average ad prices. Google and Amazon are also seeing gains from AI-enhanced advertising.

Note: Meta is competing within the Google Search & Other segment. Alphabet's total advertising revenue came to $81.63 billion.

Over the past twelve months, Meta's stock price has declined while Alphabet's shares have risen.

Why Wall Street Still Doubts the Stock

A straightforward explanation lies in capital expenditure on artificial intelligence. Alphabet invests heavily in AI through Google Cloud, which produced $24.8 billion in revenue, an 82% jump.

Meta lacks a dedicated cloud business to present to shareholders; its AI infrastructure investments primarily yield results through advertising improvements. Despite a cash-flow crunch affecting major technology companies, investors have been shifting their focus toward Alphabet.

According to TipRanks, the stock has 38 buy ratings and no sell ratings, with a consensus price target of $752.61.

Meta's upcoming milestone is its Business Agent product. Over one million businesses are already using it on WhatsApp and Messenger, and the company is now rolling it out on Instagram.

Monetization through paid subscription plans is on the horizon. Meta currently operates the faster-growing advertising platform, while Alphabet offers more transparent pathways for converting AI investments into revenue.