Meta Poised to Overtake Google in Digital Ads

Bernstein analysts believe Meta Platforms () is poised to surpass Google Search as the largest destination for digital advertising dollars this year, thanks in large part to AI-driven growth.

In their view, Meta has seen significant benefits from artificial intelligence (AI) improvements in ad targeting and automation, which have strengthened rather than disrupted the largest platforms. The firm notes that despite their scale, Meta, Alphabet (), and Amazon () have delivered some of their strongest ad growth in years due to larger data sets, better targeting, and increased automation.

The analysts argue that Meta stands to benefit most from AI advancements because it must predict user engagement with content and ads, making AI improvements particularly valuable. This contrasts with search platforms like Google Search, where users explicitly signal their intent through keywords.

However, the firm notes that while digital ad fundamentals have rarely been stronger, Meta's stock has struggled alongside Google's due to investor concerns over heavy AI capital spending and uncertain returns. Conversely, e-commerce companies have enjoyed similar AI-driven growth at a lower cost, leading to higher return-on-ad-spend gains and outperformance.