Tech giants Alphabet and Meta: Where are the investments flowing?

Alphabet and Meta Platforms dominate the digital innovation landscape and have provided their shareholders with significant assets over the past decade. Both technology giants focus on online advertising as the core of their business activities, but with different market strategies and focuses. This year, new capabilities in the field of artificial intelligence (AI) have further driven growth and catapulted the stock prices of both companies to record highs. Alphabet demonstrates its operational diversification with a variety of monetized products and services. Known for its subsidiary Google, the company not only operates the leading internet search engine and browser but also has a significant cloud computing segment and the video platform YouTube. Jurisdiction over the autonomous driving technology start-up Waymo underscores Alphabet's commitment to staying at the forefront of technology. This far-reaching business strategy highlights Alphabet through the utilization of product synergies in a globally influential advertising network. Significant investments in AI boost operational and financial momentum by enhancing search algorithms that increase ad conversion rates. In the third quarter, Alphabet's revenues rose by 15% compared to the previous year, while earnings per share increased by an impressive 37%. In light of the positive response from their advertising partners and consumers, the management demonstrates optimism regarding sustainable growth trends. Alphabet's shares have risen by 22% this year. Meta Platforms, on the other hand, while comparably strong in its financial results, currently cannot score better as an investment idea. While Meta's shares have increased by an impressive 60% year-to-date, it focuses less diversely on the digital real estate business than Alphabet. The real advantage of Meta lies in its leading position in the social media sector, which it understands to monetize efficiently. For investors looking for attractive opportunities in the large-cap technology sector, Alphabet offers a worthwhile advantage. With an average price-to-earnings ratio (P/E) of 22, based on Wall Street analysts' consensus estimates, Alphabet is significantly more attractively valued as a stock, compared to an expected P/E ratio of 25 for Meta.