Oppenheimer compared the stocks of the two leaders of the AI world - Meta and Alphabet. Which one did he prefer?

Analyst Oppenheimer raised the target price of Alphabet shares and at the same time lowered it for Meta securities. He believes that Google is closer than Meta to getting a return on its investments in artificial intelligence. Therefore, Alphabet's securities are more attractive in the near term, while Meta is better suited to bet on the long term.

Analyst Jason Helfstine of Oppenheimer raised his target price on Alphabet shares from $270 to $300, maintaining an Outperform rating on the stock, Barron's writes. At the same time, Helfstine cut Meta's target price from $870 to $825, though it kept the same Outperform rating. Oppenheimer's new targets suggest Alphabet shares are up nearly 17% from current levels, while Meta's securities are up about 13%.

Helfstein believes that Alphabet is now closer than Meta to realizing a return on its investment in artificial intelligence, and therefore the search giant's stock looks more attractive in the short term.

"We are positive on the long-term benefits of Meta's focus on AI and its proven ability to grow faster than competitors. However, in the near-term, we are more optimistic about Google given its more conservative outlook and low valuation, despite the fact that the company has not yet fully monetized [AI tools in search] AI Mode and AI Overviews," the company wrote in a note.

Both companies are investing tens of billions of dollars in AI development. Alphabet has focused the bulk of its spending on the infrastructure needed to support its AI products, including search services, Barron's writes. AI Overviews are automatic answers to queries that appear at the top of Google's search page, while AI Mode is an AI-enabled search mode.

"AI Overviews are driving a 10% increase in queries, and that number continues to grow," Helfstein noted. - "We expect Google to get additional growth from AI Mode ads (now in beta testing) in 2026, and to start expanding AI Overviews ads into new markets.

At the pre-market on October 21, Alphabet's Class A shares were falling by about 0.3%, while Meta's securities were virtually unchanged (growing within 0.1%). Shares of both companies are trading with P/E (price to earnings) ratios above the five-year average: Alphabet - 24.2 vs. 21.8, Meta - 24.3 vs. 21.3, specifies Barron's. This indicates that the market expects strong growth in the companies and is willing to pay more for their shares than the average of recent years.

Other analysts, in addition to Helfstein, also express optimism about the prospects of Google in the field of search AI-technology. Thus, the expert of BofA Securities Justin Post on Monday, October 20, raised the target price of Alphabet shares from $252 to $280, confirming the rating "buy" (Buy), reports Barron's.

"Despite ChatGPT's rapid growth, Google Search traffic and monetization remain stable, suggesting that the use of generative AI is creating an additional, rather than competing, market," Post said.

Most analysts consider both companies' stocks attractive buys, especially Alphabet. According to MarketWatch, 75 analysts track Alphabet stock, with 62 recommending Buy (53 Buy and 9 Overweight) and 13 recommending Hold. No analysts recommend selling. Meta stock is rated by 71 analysts, with 62 recommending Buy (52 Buy and 10 Overweight), eight recommending Hold, and only one recommending Sell.

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