Meta's ad revenue grew 26% in the third quarter to $63.1 billion, more than double the 12% growth rate of Google's search division, which brought in $63.4 billion. The gap reflects diverging fortunes as artificial intelligence reshapes how people find information online.
Meta credits its AI-powered ad tools with the acceleration. The company's Meta AI business assistant, available within Ads Manager, helped advertisers adopting its recommendations drive almost 5% more conversions and increase advertising investment by 9% compared with non-adopters, according to Meta CFO Susan Li. Nearly 10 million advertisers used at least one of Meta's AI tools in the quarter. One example: syrup producer Simply Organic Maple saw a 57% increase in purchases and a 36% decrease in cost per purchase after using the system.
Google faces headwinds from chatbots replacing traditional search. ChatGPT, Anthropic's Claude, and Meta's recently launched Muse assistant offer answers directly rather than links to websites, potentially reducing clicks to Google's advertising partners. Nate Elliott, an AI analyst at Emarketer, told CNBC that "if ChatGPT or Claude or Muse is better at helping them find what they're looking for, people's search habits might change for the first time in a generation. That's potentially catastrophic for Google's ad business."
Google is deploying its Gemini models across its ads infrastructure and rolling out AI Overviews and AI Mode to compete, though the approach risks cannibalizing its own search revenue. Search queries hit a record high in the quarter, but revenue growth slowed.
The divergence reflects a broader challenge for both companies. Meta still depends on ads for 98% of revenue, while Google has diversified further with cloud computing, which reported over 100% growth to $31 billion in quarterly revenue. Both companies are spending heavily on AI infrastructure: Google projects up to $205 billion in capital expenditures this year, while Meta expects up to $145 billion.
Following its third-quarter results on Wednesday, Alphabet stock fell more than 12%, wiping out about $500 billion in market value. Meta stock fell 14% in October after a 27% surge in September.