AI shifts advertising dominance as Google search growth slows

Meta and Alphabet are experiencing divergent paths as artificial intelligence alters consumer behavior and digital advertising models. In the third quarter, Meta recorded a 26% growth in advertising revenue, significantly outpacing Google’s search and related unit, which grew by 12%.

This gap highlights a broader shift as consumers increasingly turn to AI-driven chatbots—such as ChatGPT, Anthropic’s Claude, and Meta’s own Muse—for information, reducing reliance on traditional search engines. Nate Elliott, an AI analyst at Emarketer, suggested that this shift in discovery habits could be disruptive for Google’s established ad business, as users move away from traditional link-based search results.

Meta, conversely, is utilizing AI to enhance ad targeting capabilities across Facebook and Instagram, capturing more value from user engagement. Both companies remain under pressure from investors to justify the significant capital expenditure required to build AI infrastructure, as recent earnings reports led to increased market volatility for both technology giants.