Meta may overtake Google Search in ad revenue this year - Bernstein

Investing.com -- Meta Platforms is on track to surpass Google Search in advertising revenue before the end of 2026, according to Bernstein analysts. In the second quarter of 2026, Meta captured nearly half of every incremental digital advertising dollar.

The growth in digital advertising revenue has exceeded expectations set two years ago. Analyst estimates from 2024 for 2026 ad revenue growth were less than half the rate that Meta and Google Search are expected to deliver this year.

Artificial intelligence is driving the expansion in digital advertising through multiple channels. AI improves content recommendations, increases user engagement and online activities, reduces the time from product discovery to purchase, and enhances ad targeting and delivery. These improvements result in higher conversion rates and stronger ad performance.

The largest advertising platforms are benefiting most from AI capabilities. Meta, Google, and Amazon are delivering some of their strongest ad growth in years despite their large scale. Larger platforms have advantages including bigger data sets, easier audience targeting, better ad automation tools, and more accurate measurement capabilities, which allow them to deploy AI more effectively.

Meta has seen substantial impact from AI on ad growth. Excluding other ad revenues such as Maps and Gmail, Bernstein analysts suggest Meta may already have matched Google Search in revenue. Meta relies on AI to predict which content and ads users will engage with, making AI-driven improvements in recommendations, targeting, and measurement particularly valuable.

E-commerce companies have benefited from the same AI trends with lower costs. Revenue revisions this year for e-commerce companies are in line with digital advertising platforms. E-commerce platforms are seeing improved return on ad spend driving marketing efficiency, and their stocks have outperformed digital advertising platform stocks year-to-date.

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