Alphabet (GOOG -0.61%) (GOOGL -0.55%) and Meta Platforms (META -3.54%) probably have more in common than you might think. Both are members of the rarified trillion-dollar club in market capitalization. They are members of the Magnificent Seven group of stocks that have grown so much in recent years that they account for more than a third of the S&P 500 index.
And finally, both companies have powerful advertising businesses that account for the lion’s share of their revenue. Alphabet made $81.63 billion in the second quarter from advertising, which accounted for 69% of the company’s overall revenue. Advertising is even more important for Meta, which brought in $59.36 billion in ad sales, making up nearly 98% of the company’s total revenue.
Alphabet and Meta Platforms devote significant energy and resources to advertising, using artificial intelligence to optimize their advertising engines and make them more effective and profitable. Which of these AI advertising stocks is the best to hold over the long term?
If you’re looking at the next five years, I think the choice is clear.
Image source: The Motley Fool.
Alphabet is an advertising juggernaut
Alphabet’s unique position in web-based advertising starts with some built-in advantages — the company’s Chrome browser is the most widely used in the world, with 68% of the global market. And its Google search engine is even more dominant, with 91% of the global market share.
Alphabet leverages these advantages to a powerful revenue engine that includes Google Search, its YouTube video platform, and Google Network, where online ads appear on Alphabet’s own sites and its partner websites.
Segment | Q2 2026 Revenue | Q2 2025 Revenue | % Growth |
|---|---|---|---|
Google Search and Other | $63.271 billion | $54.190 billion | 16.75% |
YouTube Ads | $11.055 billion | $9.796 billion | 12.85% |
Google Network | $7.303 billion | $7.354 billion | (0.69%) |
Total Google Advertising | $81.629 billion | $71.340 billion | 14.42% |
Data source: Alphabet.
Alphabet is using its Gemini AI model to improve the quality of its ad results, enabling it to find relevant ads for longer searches that the company has previously struggled to monetize. Its AI Max, used in Google Ads search campaigns, uses AI to expand keyword matches and adjust ad copy.
Google Search is also seeing improved revenue from the company’s AI Overviews and AI Mode features, which incorporate AI into search results to make them more relevant, according to management on the company’s most recent earnings call.
Today’s Change
(-0.55%) $-1.90
Current Price
$344.00
Key Data Points
Market Cap
Day’s Range
$341.93 – $347.25
52wk Range
$196.59 – $408.61
Volume
219.8K
Avg Vol
32.7M
Gross Margin
60.94%
Dividend Yield
0.25%
It’s all about advertising for Meta
Meta Platforms’ role in the advertising space is through its social media platforms, including Facebook, Instagram, WhatsApp, Messenger, and Threads. Collectively, the apps average 3.6 billion daily users.
Meta reported that ad impressions across its apps increased 14% year over year, while the average price per ad rose 12%. Meta has incorporated AI throughout its ad ecosystem to automate campaigns, target audiences, improve delivery, and generate content. Nine million small businesses use at least one of the company’s AI ad creative tools, CEO Mark Zuckerberg told analysts on the company’s earnings call.
It also recently released the Meta Generative Recommender tool, which incorporates large language models to predict which ads to show each user, making its ad matching smarter and more targeted.
Today’s Change
(-3.54%) $-20.88
Current Price
$568.97
Key Data Points
Market Cap
Day’s Range
$564.75 – $590.24
52wk Range
$520.26 – $790.80
Volume
127.9K
Avg Vol
18.1M
Gross Margin
81.75%
Dividend Yield
0.37%
Which is the better buy?
Meta’s a solid business as it finds new ways to monetize its users, but Zuckerberg’s recent 6,500-word manifesto also shows that the company’s primary focus in the coming years will be creating personal AI assistants and finding new ways for people to use AI. It’s an interesting notion, but Zuckerberg’s new focus also reminds me of his earlier vision to create and monetize the metaverse. That didn’t work well for Meta Platforms’ stock.
So, for my money, I prefer Alphabet over Meta as the top AI advertising stock for the next five years.
