Meta vs. Google: Investors want results, not vision

Meta's stock is falling dramatically after it reported earnings yesterday. As of this writing, it’s down more than 10%.

Alphabet's stock is heading up.

Why? Both companies reported record revenue ($100B-plus for Alphabet, $50B+ for Meta) and strong user metrics. Both said they were increasing CapEx spending beyond previous estimates. Both talked about AI investment, AI impact, AI AI AI...a lot.

Meta's surprise tax hit, which sent earnings per share plummeting from $7.25 (without the tax hit) all the way to $1.05 could have been what spooked investors.

But I also attribute it to the way each company talked about AI.

In prepared remarks, Alphabet's Sundar Pichai came out firing.

“We’re seeing AI now driving real business results across the company.” —Sundar Pichai, Alphabet CEO

Pichai then systematically and clearly listed all the ways Alphabet was using AI and how it was directly creating revenue for things like search, cloud and YouTube. He referred to it as a “full-stack approach” and discussed how Alphabet’s AI infrastructure was a clear differentiator from competitors. He talked about how Google was benefiting from AI search. And he revealed concrete stats about the results of the company’s AI activities.

Image source: Alphabet, “Q3 earnings call: Remarks from our CEO”

Meta’s Mark Zuckerberg also mentioned AI frequently in his prepared remarks, but his opening statement was about futuristic things like superintelligence rather than focusing on the direct impact of AI investments on the current business.

“I'm very focused on establishing Meta as the leading frontier AI lab -- building personal superintelligence for everyone, and delivering the app experiences and computing devices that will improve the lives of billions of people around the world.” —Mark Zuckerberg, CEO, Meta

It’s a lofty vision, but the lack of detail likely left investors wanting more.

Meta did discuss a few direct impacts of AI, such as saying automated ad products (including the AI-powered Advantage+) were on a $60 billion revenue run rate. Meta's execs also atttributed some increases in time spent and engagement to AI-driven content recommendations.

But at this point, investors need something more concrete when it comes to AI spending and the impact on revenue. Alphabet gave that. Meta didn’t.