Alphabet & Meta: A Sticky Wicket

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Now, listen closely, because we’re talking about two rather enormous beasts – Alphabet (that’s Google, to you and me) and Meta (formerly Facebook, but let’s not dwell on past names, shall we?). Both are gobbling up the world of Artificial Intelligence like greedy guppies, and investors are terribly flustered trying to decide which one will burp up the biggest profits. It’s a right pickle, this.

The question isn’t if they’ll grow, mind you, but how quickly. And which one will trip over its own feet first. Meta is due to spill the beans on its latest quarter soon, followed by Alphabet. Trying to predict what’ll happen when they do is like trying to herd cats wearing roller skates – utterly pointless, but amusing to watch if you’re not involved. Still, a peek under the bonnet before they report is a sensible move, wouldn’t you agree?

Ultimately, it boils down to this: Meta is a bit like a slightly wonky, but remarkably speedy, bicycle. Alphabet, on the other hand, is a rather grand, multi-geared contraption with a few extra bells and whistles. The question is, does all that extra fanciness actually make it go faster?

Alphabet: The Many-Headed Beast

Alphabet, in the last quarter, managed to swell its revenues by 16% – a tidy sum, to be sure – to a whopping $102.3 billion. The engine of this beast remains its advertising – the search ads and those endless YouTube videos. Both are doing rather well, thank you very much. But what’s particularly clever is Alphabet’s side hustle – Google Cloud. It’s growing at a rate of 34% a year. That’s faster than the main advertising business, which is growing at a mere 14%. Cloud is becoming a rather significant chunk of the pie, though the advertising business still towers over it like a grumpy giant.

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All this growth, naturally, requires a mountain of money. Alphabet is planning to spend between $91 and $93 billion in the coming year. It’s like feeding a particularly ravenous dragon – you have to keep shoveling in the gold, or it’ll turn around and gobble you up. This spending, and the diversified business, means Alphabet commands a premium price. Investors are paying 32 times earnings for a share – a rather hefty sum, wouldn’t you say?

Meta: The Speedy Bicycle

Meta, now, is a simpler creature. Almost entirely reliant on advertising revenue from its social media platforms. But don’t let that fool you. It’s growing at a faster clip than Alphabet. Last quarter, revenue rose a remarkable 26% to $51.2 billion. And the number of people glued to its apps – a staggering 3.54 billion daily active users – continues to climb. It’s like a swarm of locusts, really – utterly relentless.

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Meta is achieving this growth by showing more ads (up 14%) and charging slightly more for each one (up 10%). This is because the ads are becoming more effective, attracting more demand. Susan Li, Meta’s chief financial officer, explained it all with a rather smug expression, I suspect. They’re getting better at persuading people to buy things they don’t need, which is a talent, I suppose.

Naturally, Meta is also spending a fortune. $19.4 billion in the last quarter, and between $70 and $72 billion for the year. It’s like trying to fill a bottomless pit with money – a truly Sisyphean task.

The Better Growth Stock?

So, which one to choose? It comes down to valuation and growth, you see. Meta currently trades at about 21 times forward earnings, while Alphabet is closer to 29 times. Meta offers a better price for the growth it’s delivering. Yes, Alphabet has a more diversified business and a rapidly growing cloud unit, but Meta is growing much faster. It’s a bit like choosing between a sturdy, reliable donkey and a nimble, racing hare. The hare might stumble, but when it runs, it really runs.

Alphabet is a perfectly good business, mind you. Its diversification and the growth of Google Cloud justify a higher price. But the gap between the two is simply too large to recommend Alphabet over Meta. It’s a bit like paying extra for a hat when you can get the same perfectly good head underneath.

Both companies face risks, of course. Regulatory scrutiny is a constant headache, and both are heavily reliant on advertising revenue, which is, in turn, dependent on the whims of the economy. But Meta’s cheaper valuation does a better job of pricing in these risks. It’s like buying insurance – you pay a little less upfront, knowing you’re somewhat protected from the inevitable bumps in the road.

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2026-01-23 08:22