Meta Poised to Overtake Google Search in Digital Ads This Year

Bernstein analysts believe Meta Platforms (NASDAQ: META) is on track to surpass Google Search as the largest destination for advertising dollars in digital ads this year, driven by AI gains. The firm notes that AI has strengthened rather than disrupted the largest platforms, with Meta, Alphabet (NASDAQ: GOOGL), and Amazon (NASDAQ: AMZN) delivering strong ad growth due to larger data sets, better targeting, and automation.

According to Bernstein's analysis, Meta captured nearly half of every incremental digital ad dollar in the second quarter. The firm suspects that Meta may have already caught up with Google Search, excluding other ad revenues such as Maps and Gmail. Mark Shmulik, an analyst at Bernstein, wrote that 'Meta arguably has seen the largest impact from AI on ad growth.'

The irony is that digital ad fundamentals have rarely been stronger while the stocks of Meta and Google have struggled due to investors penalizing them for heavy AI capital spending and uncertain returns.