The world’s two largest digital advertising platforms maintained a juggernaut pace in Q1, topping analyst expectations, but questions linger as to whether soaring investments in artificial intelligence will tip that momentum off balance and reorder who’s on top of the ecosystem.
Google’s ad revenue increased 15% year over year to $77.25 billion, buoyed by 19% search growth and 11% growth for YouTube. Meta, the owner of Facebook and Instagram, reported an even higher rate of growth for the period, with ad revenue jumping 33% to $55 billion.
33%
Rate of growth for Meta’s ads business in Q1
Those results add fuel to the speculation that Meta could surpass Google in digital ads revenue for the first time this year. However, Meta is also under more intense scrutiny as AI investments skyrocket. Growth in expenses outstripped revenue gains at 35% in Q1. The social media company hiked its already sizable expected capital expenditures for 2026, now estimating they will land in the range of $125 billion to $145 billion.
“That is an absolute monster number,” said David Bartosiak, stock strategist at Zacks Investment Research, in a note shared over email. “Meta is basically saying: ‘We’re going all-in on AI infrastructure.’ That’s great if it works… but in the short term, Wall Street hates uncertainty and massive spending.”
$145B
Upper range of Meta’s expected 2026 capital expenditures
Google is also spending more heavily on its AI infrastructure, but has seen stronger demand for cloud computing, which grew revenue a whopping 63% in Q1 to $20 billion. Meta does not have a similar enterprise segment, and some of its other bets, such as the virtual reality division Reality Labs, have posted consistent losses while a once-lofty vision for creating the metaverse has fizzled.
“The irony is that Meta’s future‑facing AI ambitions are being underwritten almost entirely by the company’s legacy business: advertising inside social media apps,” said Mike Proulx, vice president, research director at Forrester, in emailed comments. “If Meta’s ad engine slows, the market’s margin for patience shrinks fast.”
63%
Growth for Google’s cloud-computing segment in Q1
After some early stumbles, Google has made strides in its AI product lineup, with Gemini forecast to unseat some of the early leaders in the generative AI space. On the back end, Google has integrated AI into more core advertising features, recently detailing plans to switch over Dynamic Search Ads and other legacy formats to AI Max. Startups like OpenAI’s ChatGPT are experimenting more with advertising, but Google’s scale and established know-how could provide an advantage.
“Our forecast shows both Google Gemini and Google AI Mode outgrowing ChatGPT this year, and Google taking the lead in generative AI users by Q1 2027,” said Emarketer Principal Analyst Nate Elliott in an email.
For now, Meta and Google command an almost equal share of the total digital ad market, at 26.8% and 26.4%, respectively, per Emarketer’s analysis. The months ahead may see the split of that pie altered further.
