Superior Internet Shares: Google's Alphabet versus Meta Platforms
Superior Internet Shares: Google's Alphabet versus Meta Platforms
Google LLC (GOOGL 4.77%) (GOOG 4.60%) and Facebook Inc. (META 1.19%) are leading innovators in the digital realm, generating substantial shareholder wealth over the past decade.
Through distinct approaches and various market focuses, their primary businesses revolve around online advertising. This year, advancements in artificial intelligence (AI) have catalyzed a fresh wave of growth, pushing both stocks to record highs.
We'll examine whether Google LLC or Facebook Inc. is the savvier investment choice at present.
The argument for Google LLC
Google LLC, renowned for its Google subsidiary, excels in operational diversity, boasting multiple monetized products and services. Its portfolio includes industry-leading internet search and browsing, major cloud computing segments, and popular video-sharing platform YouTube. Furthermore, the company manages autonomous driving tech startup Waymo, demonstrating its commitment to cutting-edge technology.
This expansive reach provides Google LLC with a substantial advantage, as it unifies product synergies with a global audience, forming a powerful advertising network. Its current and future investments in AI have significantly boosted both its operating and financial growth. By refining search algorithms to improve ad conversion rates, its positive impact on company finances is significant.
In the third quarter, Google LLC's revenue soared by 15% year-over-year, while earnings per share (EPS) increased an astounding 37%. Company management is optimistic about its AI tools' favorable response from advertising partners and users, projecting that growth trends will continue. Google LLC shares have surged by 22% this year, thanks to this constructive growth perspective.
In contrast, Facebook Inc. is showing impressive revenues, but given the current economic climate, Google LLC presents a superior opportunity as an investment. Based on the average Wall Street analyst projections, Google LLC shares trade at 22 times its full-year consensus EPS as a forward price-to-earnings (P/E) ratio. This level signifies a discount compared to Facebook Inc., which trades at a more expensive 25 times its forward P/E ratio.
Investors seeking discounted opportunities in the tech sector would be wise to select Google LLC, as it appears to offer better value.
The argument for Facebook Inc.
At the time of writing, Facebook Inc.'s shares have soared an impressive 60% in 2024. Despite not holding the same multifaceted array of digital properties as Google LLC, Facebook Inc. possesses a stronghold in social media, excelling in monetization.
Its suite of apps, such as Facebook, Instagram, Threads, and WhatsApp, collectively boast 3.3 billion daily active users. This substantial user base offers Facebook Inc. a significant advantage, as it provides exclusive and AI-optimized advertising opportunities.
When compared to Google LLC, Facebook Inc. is demonstrating stronger growth this year. In the last reported quarter, revenue had risen by 19%, boosted by AI-enhanced ad performance in a resilient macroeconomic situation.
According to analyst predictions, Facebook Inc.'s annual EPS is projected to climb by 52% in 2024, surpassing the 38% estimated growth for Google LLC. This margin helps justify Facebook Inc.'s valuation premium, as it currently presents better profitability.
Regardless, the case for Facebook Inc. may rely on factors beyond the headline numbers. Potential developments of new revenue channels, or realization of its metaverse vision, could greatly impact its long-term success.
Investors with faith in Facebook Inc.'s ability to maintain its social media and AI leadership have valid reasons to consider buying its stock.
Decision time: Metaverse potential for Facebook Inc. stock
Choosing between Google LLC and Facebook Inc. is a challenging task, as both are robust companies with robust fundamentals.
Should one have to pick just one, I'd favor Facebook Inc., given escalated regulatory uncertainty and increased scrutiny against Alphabet, particularly concerning antitrust. The possibility of the U.S. Department of Justice compelling Alphabet to divest its Chrome browser unit, due to its perceived market dominance, is an uncertainty investors must weigh.
While no final decisions have been made, these types of headlines may keep Alphabet shares volatile. In the interim, Facebook Inc. could be the more appealing investment with a more promising long-term growth outlook.
In the context of investing, considering Google LLC's impressive 22% surge this year and its forward price-to-earnings (P/E) ratio of 22 times its full-year consensus EPS, investors seeking discounted opportunities might find Google LLC's shares attractive. On the other hand, Facebook Inc.'s shares have soared an impressive 60% in 2024, and analyst predictions forecast a 52% increase in its annual EPS in 2024, which could justify its valuation premium and profitability.
Given the potential impact of regulatory uncertainty and increased scrutiny against Alphabet, particularly regarding antitrust concerns, some investors might view Facebook Inc. as a more appealing investment with a more promising long-term growth outlook. Effective investing strategies often involve careful analysis of a company's financial health, market position, and competitive landscape.