"Defying gravity": Meta prepares to catch up with Google in ad revenue

Meta is capable of catching up with Google in terms of advertising revenue by the end of 2026, according to Bernstein. The key factors of the forecast are the growth of user engagement, successful implementation of AI and improved advertising efficiency. Against this background, analyst Bernstein predicts an increase in the price of shares of the owner of Facebook by about 20%.

Meta Platforms, which owns social networks Instagram and Facebook, could catch up to Google Search in ad revenue by the end of 2026 thanks to "truly gravity-defying results in advertising," according to Bernstein analyst Mark Shmulik. His assessment is published by MarketWatch.

Shmulik recommends investors to buy Meta shares. He set the target price at $900. This implies almost 20% growth of securities from the current quotations. Shares of Google's parent company - Alphabet - the analyst gives a more neutral assessment - "hold", with a target price of $210, which almost corresponds to the closing price on August 26 ($207).

Quotes of both companies at the premarket on August 27 were almost unchanged.

In its financial report for the second quarter of 2025, Meta said its advertising revenue grew 21% year-over-year to $46.6 billion out of total revenue of $47.5 billion, while Google Search's ad revenue for the same period was $54.2 billion and could reach $65.4 billion by the fourth quarter of 2026, according to FactSet. The consensus forecast calls for Meta's advertising business to be at a comparable level by December 2026, "while Meta bulls expect even more impressive results," Shmulik wrote.

Analyst Bernstein noted that Meta earned about 45 cents on every additional dollar spent on digital advertising in the last quarter. That boosted its market share to 37%, up from 35% a year earlier. That growth was made possible by "a double-digit improvement in both user engagement and ad effectiveness."

That puts Google on the defensive. While Google Ads gets 45% of advertisers' current digital ad spend, for every new ad dollar Alphabet gets, it only gets 30 cents, according to Bernstein. If this trend continues, Meta will have a direct path to becoming the dominant player in the digital advertising market.

An additional risk for Google is ChatGPT and other search AI tools that help users get answers directly but hurt search engines whose revenue depends on ad clicks, MarketWatch writes.

Meta's strong results validate the success of its AI initiatives, which drive audience engagement and enable better ad pricing. The company's Advantage+ product, which offers AI-powered solutions from content generation to campaign optimization, saw strong growth last quarter. In a report for the same period, the company said the average price per ad grew 9%.

The time users spend in Meta's apps is also growing thanks to AI-powered content recommendation systems, further fueling its advertising ecosystem. In the second quarter, time spent on Facebook and Instagram increased by 5% and 6%, respectively.

According to Shmulik, thanks to Meta's impressive results, the Internet and digital advertising sector is once again attracting investor interest. The company has shown that AI can be used to grow revenue - through recommendation algorithms that increase engagement and more effective targeted advertising. In addition, artificial intelligence reduces labor costs and helps Meta to develop in the field of creative advertising design.

Shmulik believes that Meta "is at the forefront of this movement, proving that social platforms can be major winners in the AI era."

This article was AI-translated and verified by a human editor