While Meta is using AI to strengthen its advertising business, Google is facing growing competition from AI-powered chatbots that could change traditional search behaviour. The rapid adoption of artificial intelligence is reshaping how people discover information, interact with digital platforms and engage with brands. This shift is creating contrasting outcomes for 2 of the biggest players in online advertising, Meta and Google.
In the 3rd quarter of 2026, Meta’s advertising business grew more than twice as fast as Google’s Search and other division. Meta recorded a 26% increase in advertising revenue to $63.1 billion, compared with $50.1 billion in the same period last year. Google’s Search division reported 12% growth, generating $63.4 billion. The 14-percentage-point growth gap was the widest in Meta’s favour since 2021.
Although both businesses generated almost equal advertising revenue, Google received an additional $11 billion from YouTube during the quarter.
The growing popularity of ChatGPT, Claude and Meta’s recently launched Muse assistant is creating alternatives to conventional search engines. As consumers increasingly turn to chatbots for information, they may click fewer traditional search links, potentially affecting Google’s advertising revenue. At the same time, users spending more time on Instagram are creating additional advertising opportunities for Meta.
“It’s a double-edged sword, because as AI revolutionizes discovery, people might come across tools they like better than Google,” Nate Elliott, an analyst covering AI, said. “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.”
Meta’s AI investments have also helped improve its advertising performance following Apple’s iOS privacy changes in 2021, which restricted its ability to track and target iPhone users. In 2022, Meta recorded its first-ever annual revenue decline.
Since ChatGPT’s launch in late 2022, Meta has gradually strengthened its AI capabilities, particularly across advertising products. In 2025, it introduced a business AI assistant that integrates with Ads Manager to help advertisers create campaigns and improve performance.
Meta CFO Susan Li said advertisers using the assistant’s recommendations generated almost 5% more conversions and increased their advertising spending by 9% compared with similar advertisers who did not use the tools.
She also highlighted syrup producer Simply Organic Maple, which recorded a 57% increase in purchases and a 36% reduction in cost per purchase after adopting the assistant. Nearly 10 million advertisers used at least 1 of Meta’s AI tools in the 3rd quarter.
Google is also integrating its Gemini models across its advertising infrastructure. Its chief business officer, Philipp Schindler, said the company is introducing new advertiser tools while working to improve advertising quality.
However, Google’s AI-powered Search Overviews and AI Mode are raising concerns about whether traditional search advertising could lose value as users increasingly receive summaries instead of visiting external websites. Although Google reported record-high search queries during the quarter, revenue growth has slowed.
Both companies are also investing heavily in AI infrastructure. Google expects capital expenditure of up to $205 billion this year, while Meta anticipates spending up to $145 billion. These investments have pushed both companies into negative free cash flow territory, raising questions about whether future AI-driven revenue will justify the spending.
Meta is also exploring AI subscriptions and agent-based services to diversify its revenue. However, advertising still accounts for 98% of its sales. Google is further ahead, with advertising contributing less than two-thirds of its total revenue. Its cloud business reported more than 100% growth, reaching $31 billion in quarterly revenue, supported by demand for AI infrastructure and its custom Tensor Processing Units (TPUs).
Following its disappointing quarterly results, Alphabet shares fell more than 12% on Wednesday, marking their worst-ever trading day and erasing approximately $500 billion in market value. Meta shares also declined 14% in October, their worst monthly performance since October 2022, following a 27% rise in September.
Analysts believe Google’s ability to demonstrate effective advertising monetisation in the AI era will remain central to investor confidence. Wedbush analysts noted that “GOOGL shares are unlikely to work until the search narrative changes,” adding that new advertising products and clear evidence of successful monetisation will be essential.
As AI continues to transform digital discovery, the contrasting performance of Meta and Google highlights how the technology is creating new growth opportunities while challenging established advertising models.
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