Since the introduction of artificial intelligence, Alphabet was considered a loser and Meta a winner. But the latest figures show that the tide may have turned.
• Alphabet is already monetizing AI across search, YouTube and cloud
• Meta bears higher investment costs and remains more dependent on advertising
• NVIDIA remains the technological foundation of the entire AI ecosystem
Generative AI like ChatGPT has long been seen as a threat to Google Search, Alphabet’s core business. At Meta, on the other hand, artificial intelligence should bring far-reaching advantages for the advertising business.
Around three years later, the third quarter shows a changed picture: Alphabet impresses with robust growth in search, cloud and AI. Despite increasing advertising revenues, Meta is currently suffering from significantly higher expenses.
MoffettNathanson sees Alphabet ahead in the AI race
Michael Nathanson, analyst at MoffettNathanson, also sees a change in reality: Alphabet exceeded market expectations, Meta missed them. The analysis association MoffettNathanson drew conclusions early on: the price target for Google’s parent company was raised from $295 to $305, while for Meta it was lowered from $890 to $875.
This is justified by the broader positioning. Alphabet can commercialize AI technologies directly in search, YouTube and the cloud. Meta, on the other hand, has yet to build its AI infrastructure on a large scale, while its revenue model remains almost entirely reliant on digital advertising. This asymmetry is now noticeable in the margins.
Alphabet has a more robust financial base
Another advantage lies in the capital structure. According to CNBC, Google has a cloud backlog of around $155 billion. It shows that the demand for computing and modeling capacity is stable and predictable. Alphabet can increase investments without losing sight of profitability.
With Meta the situation is less comfortable. The company must invest a significantly larger portion of its available resources in expanding the AI server landscape. The financial scope for experimental product development is therefore smaller. The question of whether and when the investments will pay off remains open.
Several large banks confirm this development. JPMorgan points out that AI-powered search views could support rather than weaken query frequency in Google. Goldman Sachs and Deutsche Bank recently raised their expectations for Alphabet – citing emerging economies of scale.
NVIDIA remains the benchmark in the AI sector
While Alphabet and Meta compete for the best application models for AI, NVIDIA remains the technological foundation of the entire ecosystem. According to analysts, the group benefits like no other from continued strong demand for data center GPUs and is considered the clear spearhead in the AI race.
NVIDIA is no longer just a graphics card manufacturer, but also supplies the infrastructure for cloud platforms, autonomous systems and industrial AI applications. The question for Alphabet and Meta is therefore not whether AI is growing, but rather who can derive the most added value from the foundation created by NVIDIA. On November 19th, the chip manufacturer will present its figures for the third quarter. These are likely to be an important indicator of how sustainable the investment dynamic remains.
Editorial team finanzen.net
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