Meta Vs. Alphabet: Meta Accelerates On AI While Google Has Revenue, Earnings Advantage, Bank Of America Says

Both Meta Platforms Inc META and Alphabet Inc GOOG GOOGL have seen historic gains throughout Big Tech’s rally in 2023 and 2024.

One analyst is highlighting positive and negative signs for both companies.

The Meta and Alphabet Analyst: Bank of America analyst Justin Post maintained Buy ratings for both Meta (price target of $550) and Alphabet (price target of $200.)

Meta’s Advantages: Post is generally more bullish on Meta than on Alphabet, highlighting artificial intelligence as a key catalyst for Meta’s positioning.

“For Meta, positives include AI integrations and new Gen-AI creative tools driving higher usage, ROI and incremental ad spend (positive) while risk is growing capex and headcount intensity for AI investments. Overall, we believe this factor favors Meta.”

Additionally, Meta seems poised to benefit from U.S. legislative action against TikTok while Alphabet faces increased competition from OpenAI and Bing.

Both Meta and Alphabet are facing substantial regulatory risks from the U.S. Department of Justice and the European Union. Bank of America’s regulatory expert believes that the investigations and cases into Meta are slightly weaker than those into Alphabet.

Alphabet’s Advantages: Post believes there is more upside with Alphabet than Meta on near-term earnings. Alphabet has periodically laid off employees as a means of cost-cutting. Meta aggressively pursued cost-cutting in 2023 but seems disposed toward AI investment and headcount growth in 2024.

On revenue, the analyst believes that deceleration in revenue growth will hit Meta harder than Alphabet.

“Search revenue growth to decelerate 5pts from 14% in 1Q’24 to 9% in 4Q’24 & YouTube 6pts from 21% in 1Q’24 to 15% in 4Q’24 while Meta ad revenue growth is expected to decelerate 14pts from 27% in 1Q’24 to 13% in 4Q’24. While Meta’s absolute growth is higher, we think less expected deceleration favors Alphabet,” Post said.

Price Action: At the time of writing, Alphabet traded at $182.33, up 1.74%. Meta traded at $509.85, up 2.19%.

Also Read: EU Charges Microsoft with Anti-Competitive Practices Over Teams Bundling

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