The post Meta vs Alphabet: Has the tide turned? appeared on BitcoinEthereumNews.com.

Key points Meta’s AI-driven ad strategy is delivering stronger returns, while Alphabet’s AI investments face skepticism, especially in Search. Meta’s profitability and cost discipline are outpacing Google, with better operating margins and more efficient capital spending. Risks differ as Meta is heavily dependent on ad revenue and economic cycles, while Alphabet faces a potential DOJ settlement and AI competition in Search. In the competitive landscape of tech giants, Meta Platforms (META) has recently outperformed Alphabet Inc. (GOOGL), the parent company of Google. The relative stock price of Meta vs. Alphabet has reached a 7-year high, raising the question whether Meta’s outperformance has just began, or has it gone too far? Meta’s AI monetization justifies its AI spend Meta is pouring a massive $65 billion into capital expenditures (capex), primarily for AI infrastructure, and investors are rewarding it. The stock has surged as Meta has effectively leveraged artificial intelligence (AI) to enhance ad targeting and optimize performance, bringing tangible improvements in engagement and revenue growth. Meanwhile, Alphabet’s $75 billion capital spend rattled investors, given the tangible returns on AI investments have been less evident so far. In fact, investors are concerned that AI-powered search tools such as ChatGPT and Perplexity AI could disrupt Google’s core search advertising model rather than enhance it. Meta’s cost discipline and soaring margins Despite its aggressive AI spending, Meta’s operating margins are soaring. Meta’s 2024 operating margin of 54% is a big jump from 41% in 2022. The company has maintained a stable ratio of capex to operating cash flow, lower than 2021 and 2022 levels, while still seeing strong earnings growth. Meanwhile, Alphabet’s capex growth in 2024 of 63% has outpaced its profit growth of 29%, a sign that its spending isn’t translating into immediate bottom-line gains. Both companies have made significant cuts to improve…

---

Filed under: News - @ February 6, 2025 10:25 am