TLDR
- Meta Platforms (META) stock opened at $614.99 on Monday after a 14% drop in October.
- Meta’s third-quarter ad revenue rose 26% to $63.1 billion, versus 12% growth for Google’s search unit.
- Alphabet fell more than 12% after its earnings, its worst day ever.
- Meta beat estimates with EPS of $7.40 against $6.54 expected.
- Analysts rate Meta a “Moderate Buy” with an average target of $833.12.
Meta Platforms (META) stock opened at $614.99 on Monday. That is below both its 50-day average of $670.03 and its 200-day average of $632.26.
The stock fell 14% in October, its worst month since October 2022. That came after a 27% jump in September.
Meta’s ad revenue rose 26% in the third quarter to $63.1 billion. Google’s search unit grew 12% and brought in $63.4 billion.
The 14-point gap is the widest in Meta’s favor since 2021. Google also booked $11 billion from YouTube.
Meta earned $7.40 per share, topping the $6.54 consensus estimate. Revenue rose 26.1% to $64.60 billion, above the $63.34 billion expected.
Mark Zuckerberg has said AI investments are improving ad targeting on Facebook and Instagram. Users are also spending more time scrolling Instagram.
Alphabet fell more than 12% after its earnings report on Wednesday, its worst day ever. The drop erased about $500 billion in market value.
How AI Is Changing the Ad Race
Chatbots are becoming an alternative to search, and users are clicking fewer links. ChatGPT, Claude and Meta’s new Muse assistant are all in the mix.
Nate Elliott of Emarketer called the shift “potentially catastrophic for Google’s ad business.” Google said search queries hit a record high, though revenue growth is slowing.
CFO Susan Li said advertisers who adopted Meta’s AI recommendations drove almost 5% more conversions. They also raised ad spending by 9% compared with similar non-adopters.
Almost 10 million advertisers used at least one Meta AI tool in the quarter. One syrup maker saw purchases rise 57% and cost per purchase fall 36%.
Wedbush said Google stock is unlikely to work until the search narrative changes. UBS said Meta’s ad strength brings search cannibalization fears back to the front.
Spending, Analysts and Insiders
Google projects up to $205 billion in capital spending this year. Meta expects to spend up to $145 billion.
Both companies have slipped into negative free cash flow. Ads make up 98% of Meta’s sales, while they are less than two-thirds of Google’s.
Mizuho raised its Meta price target to $950 from $750 on Oct. 22. MarketBeat data shows a “Moderate Buy” consensus with an average target of $833.12.
Insiders sold about $102.2 million of Meta stock last quarter. That included sales by Zuckerberg and Li under pre-arranged trading plans.
Meta also settled a teen lawsuit tied to claims about Instagram and Facebook, removing it from an upcoming Los Angeles trial. It expanded its AMD partnership too, with a $1 billion equity investment and multi-generation chip co-design for its AI data centers.
