Overview
- Meta reported ad revenue of about $63.06 billion in the quarter, a roughly 26% year-over-year increase that propelled its ad business to within roughly $290 million of Google’s Search ad revenue.
- Google’s Search and other ads grew about 12% to roughly $63.3–63.4 billion, leaving Alphabet larger overall but narrowing the long-standing size gap between the two ad businesses.
- Meta credited adoption of its advertiser-facing generative tools for much of the gain, saying nearly 10 million advertisers used at least one of its AI tools and that customers who followed the tools’ recommendations saw higher conversions.
- Analysts warn that conversational assistants and chatbots are changing how people find information, reducing clicks on traditional search links and creating a structural risk to Google’s click-based ad model.
- Both firms are spending heavily on AI infrastructure and custom chips, a push that is expanding capabilities but also producing negative free cash flow and investor worries about when those costs will be profitably monetized.