Meta AI Ads Surge as Google Search Falters — SkimNews
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- Meta's ad revenue grew 26% year-over-year to $63.1 billion in Q3, driven by AI-powered targeting tools that increased advertiser conversions and spending, with nearly 10 million advertisers using at least one AI feature.
- Google's Search and other unit grew 12% to $63.4 billion in Q3, a sharp slowdown amid rising competition from AI chatbots like ChatGPT and Claude that reduce clicks on blue links and threaten ad revenue.
- Alphabet lost over $500 billion in market cap after its Q3 earnings miss, marking its worst single-day stock drop ever as investors reacted to AI-driven search cannibalization fears.
- Meta and Google are investing up to $145 billion and $205 billion respectively in capital expenditures this year to build AI infrastructure, pushing both into negative free cash flow.
- Susan Li, Meta CFO, stated that advertisers using Meta AI in Ads Manager saw nearly 5% more conversions and increased investment by 9%, citing a 57% purchase lift for Simply Organic Maple.
- Philipp Schindler, Google’s chief business officer, said the company is deploying Gemini models across its entire ads infrastructure to improve ad quality and tools for advertisers on YouTube and other properties.
Why it matters: Meta gains ground as its AI boosts ad performance and revenue at a time when Google’s core search monetization model is under structural threat from AI chatbots, despite both spending heavily on future infrastructure. The 14-point growth gap in Meta’s favor is the widest since 2021, reshaping investor confidence and market valuations overnight.
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