Key Points
- AI is significantly boosting digital advertising revenue for tech giants Meta and Google.
- Asian-based advertisers, previously hesitant due to tariffs, have increased their spending, mostly on the largest platforms.
- Smaller ad-based companies like Snap and Pinterest reported disappointing results, struggling to compete.
- Reddit was a surprising outlier, reporting a huge 78% year-over-year increase in sales.
Artificial intelligence is proving to be a massive booster for the digital advertising world, as giants Meta and Google (Alphabet) just reported stellar earnings driven by strong ad sales. Meta’s CEO Mark Zuckerberg even credited AI with making their ad system more efficient, which helped drive a 22% jump in sales. This is a clear sign that big investments in AI are now paying off in their core business.
A key reason for the rebound is that Asian online retailers, who had pulled back on spending due to U.S. tariff uncertainty, are now coming back to the market. But they seem to be flocking to the biggest platforms.
While Meta saw these advertisers return, Pinterest reported the opposite, saying those same retailers had cut their spending. This highlights a clear trend: during uncertain times, ad money flows to the perceived safety of giants like Meta and Google, leaving smaller players like Pinterest and Snap with little room for error.
The split between the tech giants and everyone else was clear this quarter. While Reddit had a surprisingly strong comeback, Snap and Pinterest both reported lukewarm results. Snap blamed a botched update to its ad platform, while Pinterest’s results just didn’t meet expectations, showing how tough the market is for smaller competitors.
For all the talk about new AI products, the big story this quarter is how AI is turbocharging the core advertising businesses of the tech giants. And they are doubling down on this success. Both Meta and Alphabet announced they are raising their already massive spending on AI infrastructure, signaling that the AI-powered ad race is only just getting started.
