When will Meta overtake Google search in digital ads? Bernstein weighs in

Investing.com -- Bernstein believes Meta Platforms (NASDAQ: META) is on course to overtake Google Search as the largest single destination for advertising dollars this year, powered by AI gains.

However, the firm added that it is e-commerce names, not the ad platforms, that are winning in the market.

"Meta arguably has seen the largest impact from AI on ad growth and is on track to surpass Google Search this year," analyst Mark Shmulik wrote. Excluding "other" ad revenues such as Maps and Gmail, Bernstein suspects Meta may already have caught up.

In the second quarter, the firm noted, Meta captured nearly half of every incremental digital ad dollar. It argued AI is strengthening rather than disrupting the largest platforms, with Meta, Alphabet (NASDAQ: GOOGL) and Amazon (NASDAQ: AMZN) delivering some of their strongest ad growth in years despite their scale, thanks to larger data sets, better targeting and automation.

Meta stands to benefit most, Bernstein said, because unlike search, where users explicitly signal intent, it must predict what content and ads users will engage with, making AI improvements especially valuable.

The irony, Shmulik added, is that digital ad fundamentals have rarely been stronger while the stocks have struggled, as investors penalize Meta and Google over heavy AI capital spending and uncertain returns.

The benefits are instead accruing to e-commerce, which has enjoyed similar AI tailwinds at far lower cost, driving return-on-ad-spend gains and outperformance.

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