TLDR
- Meta Platforms (META) gained 18.8% year-to-date while Alphabet (GOOGL) dropped 8.5% in the same period
- Meta’s Q1 2025 advertising revenue grew 16.2% to $42.3 billion, outpacing Alphabet’s 8.5% revenue growth to $66.9 billion
- An AI-powered ETF from Qraft Technologies bought more Meta stock in June after dumping it in May, with Meta now their second-largest holding
- Meta’s AI tools and recommendation systems are driving user engagement increases of 7% on Facebook, 6% on Instagram, and 35% on Threads
- Alphabet faces regulatory pressure from DOJ antitrust lawsuit that could potentially break up the company
Meta Platforms is having a much better year than its digital advertising rival Alphabet. The social media giant’s stock has climbed 18.8% year-to-date while Alphabet has fallen 8.5%.
This performance gap caught the attention of an AI stock-picking system. SoftBank-backed Qraft Technologies’ artificial intelligence model dumped weight-loss drugmaker Eli Lilly in June and loaded up on tech names including Meta.
The AI trader had actually sold Meta in May, only to buy back a large chunk the following month. Meta has gained 8% in June alone, validating the algorithm’s flip-flop decision.
“The model is for sure seeing potential for Meta this month, and it’s holding up for it so far,” said Justin Tam, Qraft’s ETF Lead. The AI system manages three exchange-traded funds with combined assets of roughly $50 million.
Meta now sits as the second-largest holding in Qraft’s momentum fund AMOM, trailing only Nvidia. The fund also picked up Broadcom, Netflix, Costco and Palantir with similar allocations to last month.
AI Powers Meta’s Revenue Growth
Meta’s first quarter results help explain the AI bot’s bullish stance. The company’s advertising revenue jumped 16.2% year-over-year to $42.3 billion. That growth came from a 5% increase in ad impressions and a 10% boost in average ad prices.
Alphabet managed respectable but slower growth. The search giant’s revenue rose 8.5% to $66.9 billion, driven by 9.8% growth in Search revenues and 10.3% growth in YouTube ad revenues.
Meta’s secret weapon appears to be its heavy investment in artificial intelligence. The company’s proprietary machine learning system Andromeda helps power ad recommendations using Nvidia chips.
A new Generative Ads Recommendation model for Facebook Reels has increased conversion rates by 5%. Meta also saw 30% more advertisers using AI creative tools over the quarter.
The AI improvements are keeping users glued to Meta’s apps longer. Time spent on Facebook rose 7%, Instagram usage climbed 6%, and Threads engagement surged 35% over the past six months.
Regulatory Clouds Hang Over Alphabet
While Meta rides high on AI momentum, Alphabet faces growing regulatory pressure. The Department of Justice has filed an antitrust lawsuit arguing Google struck anticompetitive deals with Apple and others for prime search placement.
The DOJ wants to break up Google, potentially separating Chrome, Search, and Android into different companies. This threat comes as Google faces growing competition from AI-powered rivals like ChatGPT, Grok, DeepSeek, and Perplexity.
Google is fighting back with its own AI initiatives. AI Overviews now reaches more than 1.5 billion people monthly and is driving over 10% more usage in major markets like India and the United States.
Circle to Search, Google’s visual search feature, expanded to 250 million devices by the end of Q1 2025. Usage jumped roughly 40% during the quarter.
Despite these efforts, analysts expect Google’s advertising revenue to grow just 6.6% year-over-year to $282.05 billion. Meta’s advertising revenue is projected to climb 11.8% this year.
The earnings outlook favors Meta as well. Analysts raised their 2025 earnings estimate for Meta by 7 cents to $25.25 per share over the past month. Alphabet’s estimate held steady at $9.51 per share.
Both companies have beaten earnings expectations in their last four quarters. Meta’s average surprise of 17.3% tops Alphabet’s 14.64%, showing more consistent outperformance.
Valuation metrics tell a different story though. Meta trades at 8.89 times forward sales compared to Alphabet’s cheaper 6.13 times multiple.
Global digital ad spending is expected to grow 7.9% to $678.7 billion in 2025 according to dentsu forecasts. Both companies should benefit from this tailwind, though higher tariffs could dampen growth.
Meta AI usage continues climbing with roughly one billion monthly users globally. The company plans to add more personalized features to boost engagement further.
Qraft’s AI trading system balances short and long-term momentum signals to avoid getting caught in hype cycles. The model can switch between momentum periods of one to three months or one to five years based on market conditions.
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