Alphabet vs. Snap: Which Digital Advertising Stock Has an Edge?

Alphabet GOOGL is a behemoth in the digital advertising market, in which Snap SNAP is the smaller challenger. Increasing deployment of AI and machine learning is driving content creation, while chatbots and virtual assistants are helping advertisers offer personalized user interactions and content personalization. These benefit both GOOGL and Snap stocks. Both are expected to benefit from growing digital advertising spending, which, per Statista, will account for 82.2% of total spending by 2030. However, Alphabet or Snap, which stock has an edge under the current scenario?The Case for Alphabet StockAlphabet’s advertising revenues are expected to benefit from strong search and YouTube advertising revenues. Google continues to dominate the Search business with more than 90% share, followed by Microsoft’s Bing, with 4.08% share, per the latest data from StatCounter.Alphabet has been actively embedding AI, especially within Search, to enhance user experience, provide better AI-focused features and consequently improve ad performance. Alphabet is advancing visual and contextual search capabilities. The Circle to Search feature is now active on more than 300 million devices. The company is adding functionalities to help people explore complex topics and ask follow-up questions without switching apps. Google’s AI-powered Search features are driving deeper engagement, with AI Mode offering advanced reasoning and multi-modal responses. Users are generating queries twice as long as those in traditional searches. GOOGL is expanding AI mode in Google Search by adding more than 35 languages and over 40 new countries and territories. AI Mode in Search is now expanded to more than 200 countries and territories.AI is helping in improving YouTube recommendations and auto dubbing, which generates better returns for creators and brands by expanding the audience. The company launched Veo 3, photo to video and generative effects to shorts, making content creation easier. GOOGL’s efforts are attracting advertisers. In the past 12 months, YouTube ads viewed on CTV screens drove more than 1 billion conversions. YouTube’s expanding addressable market, driven by new services like shorts, which now averages more than 200 billion daily views, bodes well for Alphabet’s prospects.The Case for Snap StockSnap’s advertising platform is evolving with commerce-driven ad volume growing 39% year over year in the second quarter, and newer ad formats such as Sponsored Snaps are delivering stronger conversion outcomes. With campaign tools improving measurability and efficiency, Snap is seeing broader advertiser adoption. Snap's advertising platform improvements have resulted in total active advertisers’ growth. In the second quarter of 2025, purchase volume for commerce advertisers increased 39% year over year, while total purchase-related advertising revenues grew more than 25% from the prior-year period.Snap continues to evolve as a visual-first social media platform with strong traction among Gen Z users. Its global user base continues to expand, reaching 469 million Daily Active Users during the second quarter of 2025, up 8.6% year over year. Premium experiences remain a key catalyst to Snap’s engagement strategy. The Snapchat+ subscriber base approached 16 million in the second quarter of 2025, supported by new offerings like Lens+, which gives access to AI-powered video effects and exclusive features. Snap’s AR tools, including Camera Kit and Spectacles, continue to differentiate it from its peers by enabling immersive experiences across both consumer and enterprise use cases.However, Snap is suffering from stiff competition, with U.S. time spent on Snapchat plummeting nearly 14% year over year in June 2025, exposing the platform's inability to retain user attention, which is a headwind.SNAP’s Earnings Estimate Revision Steady, GOOGL’s Goes SouthThe Zacks Consensus Estimate for GOOGL’s 2025 earnings is pegged at $9.92 per share, down by four cents over the past 30 days, indicating a 23.4% increase from 2024’s reported figure. Alphabet Inc. Price and Consensus Alphabet Inc. price-consensus-chart | Alphabet Inc. Quote The consensus mark for SNAP’s 2025 earnings has been steady at 26 cents per share over the past 30 days, suggesting 10.3% growth from 2024. Snap Inc. Price and Consensus Snap Inc. price-consensus-chart | Snap Inc. Quote  Price Performance and Valuation: GOOGL and SnapYear to date, Alphabet shares have jumped 61.5%, outperforming Snap’s plunge of 26.1%.GOOGL and SNAP Stock’s Performance Image Source: Zacks Investment Research Valuation-wise, both Alphabet and Snap are overvalued, as suggested by the Value Score of D and F, respectively. In terms of forward 12-month price/sales, Alphabet shares are trading at 8.81X, higher than Snap’s 2.08X.GOOGL and SNAP Valuation Image Source: Zacks Investment Research ConclusionAlphabet is dominating the Search business, and YouTube is benefiting from the growing adoption of shorts. However, Snap is suffering from stiff competition that makes the stock risky for investors.Currently, Alphabet has a Zacks Rank #3 (Hold), making the stock a stronger pick compared with Snap, which has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Quantum Computing Stocks Set To SoarArtificial intelligence has already reshaped the investment landscape, and its convergence with quantum computing could lead to the most significant wealth-building opportunities of our time.Today, you have a chance to position your portfolio at the forefront of this technological revolution. In our urgent special report, Beyond AI: The Quantum Leap in Computing Power, you'll discover the little-known stocks we believe will win the quantum computing race and deliver massive gains to early investors.Access the Report Free Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Alphabet Inc. (GOOGL): Free Stock Analysis Report Snap Inc. (SNAP): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks