One of the biggest wars in the US stock world is the infamous “GOOGL vs. META” debate. Alphabet and Meta Platforms are two of the biggest stocks in the country. only Nvidia (NVDA) and Apple (APPL) as notable competitors. A closer look suggests bullish ratings for both GOOGL and META stocks, but only one could perform better than the other this month.
There are two major differences between how GOOGL and META operate to earn their high ranks on the market. Alphabet, Google’s parent company, generates revenue from online advertising, and sales of apps and content on Google Play and YouTube. It also earns from fees on cloud services and other licensing revenue. On the other hand, Meta Platforms, the parent company of Facebook; Instagram; and WhatsApp; also generates revenue from online advertising.
Dividing and explaining each stock’s October outlook would be the ideal first step before finding a definitive answer in the GOOGL vs. META debate. Hence, here is how Alphabet is expected to fare this month.
Source: University Information Services – Georgetown University
Alphabet (GOOGL) Stock Performance in October
At a price-to-earnings (P/E) ratio of 23.5x, GOOGL is the cheaper of the two stocks. Bears are slowly shifting against Alphabet stock, citing the continued surge in the AI industry and corresponding stocks. At the 2024 Quality-Growth Conference last week, Stephen Yiu of Blue Whale Capital explained that generative AI will significantly change Alphabet’s business model, which could interrupt gains.
Yiu shares a negative view of GOOGL due to signs of a market share decline from Google Search, which once held a 90% share. Furthermore, Alphabet’s AI model, Gemini, has failed to exceed performance expectations since its latest update. Some experts may see this as a “buy the dip” opportunity for shares. However, Those instances require intense research on a product’s potential upside before making rash decisions. At $200.29, the average Alphabet stock price target implies an upside potential of 21.85%, according to TipRanks, with a Moderate Buy consensus rating.
Also Read: Alphabet Inc. US Stock: Target $201: Should You Invest In Google
Meta Platforms (META) Stock Performance in October
Source – WIRED
On the other hand, Meta Platforms is a much more premium stock option right now. At a P/E of 30x, the stock is on the rise after a bottom spell two months ago. Meta Platforms is less diversified than Alphabet, capturing 98% of its revenue from advertising in the second quarter. The all-eggs-in-one-basket model of META may make it seem like a safer and surefire stock, but, a downturn could prove financially fatal. The high risk and high reward are what make META such a premium option right now to buy, hence its price compared to GOOGL.
In addition, Yiu also commented on Meta Platforms, picking it as his top Magnificent Seven stock aside from NVIDIA (NVDA). He believes that Meta has greater access to personal information than Alphabet. Also, Meta Platforms will likely perform in a positive direction with the recent growth of the AI sector. Meta CEO Mark Zuckerberg supported Yiu’s remarks, stating that AI will allow Meta to offer even more tailored advertisements.
Also Read: US Stock: Meta Platforms Predicted To Hit $811 Share Price: Here’s When
GOOGL vs. META: Which Stock Will Outperform the Other this October
While Meta Platforms (META) is trading at a premium price compared to Alphabet (GOOGL), most experts are putting their eggs in the latter in October. The near-term outlook may appear to benefit the asset, however, the long-term seems far more suitable for GOOGL. Notably, Meta’s ad revenue growth rate reached 22% in the second quarter, double that of Google’s growth rate. However, it’s important to consider that Alphabet’s growth rate was based on a much larger scale versus Meta’s total revenue of $39.1 billion for Q2.
META currently has a strong buy signal as opposed to the moderate buy signal of GOOGL. Both stocks are expected to benefit from AI revenue, but GOOGL will likely far outperform its opposition in this area. Google Cloud revenues also continue to rise sequentially, surpassing $10 billion in quarterly revenue for the first time in the second quarter. With Google Cloud accounting for GOOGL’s AI revenue, this is expected to climb more when quarterly performances are announced for both companies soon.