Meta Platforms (META) is expected to knock Alphabet’s (GOOGL) Google from its perch as the world’s leading digital-advertising business this year.
According to this WSJ report:
Advertising research firm Emarketer projects that Meta will surpass Google in net ad revenue this year, reaching over $243.46 billion, edging past Google’s $239.54 billion…
Worldwide ad growth for Meta is expected to rise from 22.1% in 2025 to 24.1% this year, Emarketer estimates. The projection is particularly notable because analysts consider Meta’s recent ad growth unprecedented, especially given that they expected Meta’s growth would slow given its scale. Google’s global growth rate is projected to remain flat at 11.9% this year.
The article highlights several reasons for this outperformance:
Meta’s ad business is seeing a lift, thanks to the success of new ad offerings, including the short-form video format Reels, and the broader boost that artificial intelligence has provided.
Meta has demonstrated “incredible patience” in establishing substantial user habits for products like Reels, the microblogging site Threads and the messaging platform WhatsApp before eventually introducing advertisements, according to Max Willens, a principal analyst at the research firm.
AI Investments Power Meta’s Success
This is further evidence that Meta’s massive investment in artificial intelligence (“AI”) is paying off. As this WSJ article from last week notes, the company just announced a new large language model:
The rollout of the model, called Muse Spark, is a critical moment for Meta, which has spent billions of dollars hiring AI talent in a bid to catch up to OpenAI, Anthropic and Google DeepMind. The leading labs have been putting out models at an accelerating pace…
According to Meta’s internal benchmark tests, Muse Spark outscored Google’s Gemini on some tests and was competitive with models from OpenAI and Anthropic on others. It significantly outscored xAI’s Grok on most tests. The company said the addition of Muse Spark has made Meta AI more effective at answering health-related questions, one of the top consumer uses of AI.
“Meta just did a step change from Llama 4 to this,” said Rayan Krishnan, chief executive of Vals AI, an independent startup that does testing of new frontier models and tested Muse Spark ahead of its public announcement; Llama 4 was Meta’s previous model. “They’re now a competitive lab. If the rate of progress stays, it’s not hard to imagine them producing a state-of-the-art model in a short period of time.”
Meta and Alphabet Remain Tech Winners
Both Alphabet and Meta have long been among my favorite tech stocks. Nothing about today’s news changes that.
Meta’s ad business is growing faster than Alphabet’s. But both are clear winners in this space. I remain bullish on both stocks.
Like Amazon, they’re among the most dominant, profitable businesses of all time and have substantial growth opportunities. Yet they trade at reasonable earnings multiples: 22 times for Meta and 28.5 times for Alphabet.
Editor’s Note: This article was adapted from today’s edition of Whitney Tilson’s Daily. Every day, Whitney emails his readers with his comments on the most important topics of the day, including stocks he’s investigating… great articles he has read… his media and podcast appearances. You can sign up here to receive all of Whitney’s daily thoughts and insights.
