Meta's advertising revenue grew 26% in the third quarter to $63.1 billion, up from $50.1 billion a year earlier, according to CNBC. Google's Search and other division grew 12% to $63.4 billion over the same period.
CNBC reports that Meta's ad growth reflects its AI investments, which Mark Zuckerberg has said are improving targeting tools for brands on Facebook and Instagram. Meta CFO Susan Li said advertisers using the Meta AI business assistant "drove almost 5% more conversions" and "increased their advertising investment by 9% compared with similar non-adopters." She cited syrup producer Simply Organic Maple, which saw a 57% increase in purchases and a 36% decrease in cost per purchase after using the assistant. Li said almost 10 million advertisers used at least one of Meta's AI tools in the quarter.
Google faces a different pressure. CNBC reports that chatbots such as ChatGPT and Anthropic's Claude are becoming alternatives to search, which leads consumers to click fewer links. Google's search engine now surfaces more answers through AI Overviews and AI Mode, where users mostly get summaries. Google said search queries hit a record high in the quarter, but revenue growth is slowing. UBS analysts wrote that search cannibalization fears are back, "made worse by META's ad strength this quarter and the lingering Muse/agent threat."
Alphabet's stock fell more than 12% after its earnings report, wiping out about $500 billion in market value, according to CNBC. Meta's stock fell 14% in October. Both companies are spending heavily on AI infrastructure, with Google projecting up to $205 billion in capital expenditures this year and Meta expecting up to $145 billion. Ads make up less than two-thirds of Google's revenue, while Meta still earns 98% of its sales from ads, according to the report.