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AI Is Boosting Meta's Ad Business While Weighing on Google Search
AI is boosting Meta's ad business while weighing on Google search, with Meta's ad revenue growing faster than Google's.
Key points
- Meta's ad revenue rose 26% in the third quarter to $63.1 billion, up from $50.1 billion a year earlier.
- Google's search division brought in $63.4 billion, with 12% growth, and YouTube added $11 billion in third-quarter revenue.
- Alphabet's shares fell more than 12% on their worst day ever, wiping out about $500 billion in market cap.
Why it matters. Questions are swirling about whether the companies' historic spending on AI infrastructure will generate enough revenue, and both have moved into negative free cash flow territory.
Meta's ad revenue rose 26% in the third quarter to $63.1 billion, more than twice the pace of Google's search division, which grew 12% to $63.4 billion. Analyst Nate Elliott of Emarketer told CNBC that people's search habits might change, which he called potentially catastrophic for Google's ad business. Alphabet's shares plunged more than 12% after disappointing third-quarter earnings, wiping out about $500 billion in market value.
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AI Is Boosting Meta's Ad Business While Weighing on Google Search
The gap between Meta's advertising revenue growth and Google's search expansion was the widest since 2021 in the latest quarter, according to CNBC. Google and Facebook have dominated online advertising for two decades, converting user attention into large ad revenues. The article attributes the divergence to the ChatGPT era, which is altering how people search for information and how advertisers reach them. Meta has benefited from AI-driven ad targeting, while Google's search business faces questions about changing user behaviour. The analysis draws on the most recent quarterly results.