Meta's second-quarter ad revenue hit $59.36 billion, up 27% from a year earlier, narrowing the gap with Google's core search business to $3.9 billion. That's nearly half the gap from last year, and one analyst says Meta could overtake Google Search in ad revenue this year.
The Shrinking Gap
Alphabet's 'Google Search & other' revenue came in at $63.27 billion, up 17% year-over-year. The revenue gap between the two tech giants now stands at $3.9 billion, down from roughly $7.8 billion a year ago. Bernstein analyst Mark Shmulik said Meta is on track to surpass Google Search in ad revenue this year, and that Meta captured nearly half of every new digital ad dollar in Q2.
Meta's growth isn't just about volume. The company served 14% more ads and charged 12% more per ad, driven by AI improvements in targeting and recommendations. That combination pushed ad revenue up sharply even as the broader digital ad market showed signs of cooling.
AI's Role in Ad Growth
Meta has been pouring resources into AI-powered ad tools, and the numbers suggest they're working. The 14% increase in ad impressions and 12% rise in average price per ad both point to better matching between ads and users. AI-driven recommendations are getting more relevant, which means advertisers are willing to pay more and users are seeing ads that actually fit their interests.
This isn't just a one-quarter blip. The consistent growth in both volume and pricing indicates that Meta's AI investments are paying off in a sustainable way.
Google's Broader Picture
While Google Search is still ahead, Alphabet's total advertising revenue—including YouTube and other properties—reached $81.63 billion in Q2. That's a bigger number, but the search segment is the one that matters most for the direct comparison with Meta.
Alphabet's capital spending is also supporting Google Cloud, which generated $24.8 billion in revenue, up 82%. That cloud business gives Alphabet a second engine that Meta doesn't have. Meta has no cloud segment; its infrastructure investments primarily surface through ad revenue.
Meta's Infrastructure and Business Agent
Meta's lack of a cloud business means its heavy infrastructure spending has to be justified by ad performance alone. So far, that's working. The company's Business Agent—an AI tool for businesses—is already used by over one million businesses on WhatsApp and Messenger. Instagram expansion is underway, and paid plans are coming.
That paid rollout could open a new revenue stream beyond ads, but for now, ads remain the core driver.
Analyst Sentiment
Wall Street is bullish on Meta despite the stock's decline over the past year. TipRanks data shows 38 analyst buys and no sells, with an average price target of $752.61. Alphabet's stock, meanwhile, has climbed over the same period.
The divergence in stock performance may reflect different investor expectations. Meta's ad business is growing faster, but Alphabet has the cloud cushion. The question now is whether Meta can keep up the pace as it rolls out paid Business Agent plans and expands Instagram integration.
