Google may lose its leadership in the online advertising market. What do investors need to know?

Google may lose its status as the world's largest online advertising business this year, ceding that title to Meta Platforms, research firm Emarketer has predicted. The owner of Facebook and Instagram has been accelerating its advertising revenue growth thanks to artificial intelligence and the successful introduction of new formats. However, some analysts warn of negative effects from the war in the Middle East. In addition, the digital advertising market is becoming more competitive due to other AI developers.

Meta will surpass Google in net advertising revenue this year: it will generate more than $243.46 billion versus Google's $239.54 billion, according to a forecast by advertising analytics firm Emarketer, cited by The Wall Street Journal. The estimate takes into account revenue after deducting traffic and content acquisition costs, including Google's payments to bloggers, Emarketer notes.

The growth in Meta's ad business is supported by new formats, including Reels short videos, as well as the overall effect of the introduction of AI into the company's products, the WSJ writes. Meta has shown "incredible patience" in building user habits around products like Reels, social network Threads and messenger WhatsApp before launching their active monetization, said Emarketer analyst Max Willens in a statement from the newspaper.

At the same time, Google's share of the U.S. search advertising market is declining: this year it will be 48.5%, the first time in more than a decade to fall below 50%, Emarketer predicts. At the same time, new players, including AI companies such as OpenAI and social platforms such as TikTok, are intensifying competition, the research firm said.

Ma's global advertising revenue growth rate will accelerate from 22.1% in 2025 to 24.1% in 2026, the company's analysts said, although they previously expected a slowdown, given the scale of the business. In contrast, Google's growth rate will remain at 11.9%, according to Emarketer.

Representatives for Google and Meta declined to comment to the WSJ.

Analyst firm Stifel cut its target price on Meta shares to $805 from $825 on April 13, suggesting a 28% upside from the last closing level, but reiterated a buy recommendation (Buy rating). The company lowered its 2026 digital advertising growth forecast for Meta 8.3% to 7.3%, Investing.com reported. The revision reflects expectations that uncertainty among consumers caused by inflation and high oil prices will not be short-term, but will persist for a longer period.

Barclays Bank on April 10 also confirmed its recommendation to buy Meta shares. But for him, the main reason for optimism was not advertising, but the introduction of AI in the company's services, wrote TipRanks. Over the past year, Meta has been engaged in a complete overhaul of the recommendation systems underlying Facebook and Instagram. It has recorded a 30% increase in Instagram Reels viewing time in the US alone, thus making every second of viewing time more valuable to advertisers, according to Barclays. The bank's analyst Ross Sandler set a $800 target price on Meta shares, implying a potential upside of 27% relative to the stock's closing price on Friday, April 10.

Shares of Meta, according to data compiled by MarketWatch, are recommended to buy by 65 analysts out of 72 total (Buy and Overweight ratings). Another seven analysts have a neutral stance with a Hold rating (advice to hold).

Alphabet securities are recommended to buy by 63 analysts and ten more recommend the stock to hold.

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