Decades ago, it would take weeks or even months to send a message to someone, especially if they were far away. Today, finding information and staying connected have never been easier. People can communicate instantly and find answers in seconds through digital technology. It’s no exaggeration to say that these platforms have become a key part of everyday life.
That’s what makes companies like Alphabet and Meta so interesting- at least as investments. Both have had their hand in driving the digital landscape to where it is today, and both are still hard at work shaping the future.
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For investors, that kind of leadership creates opportunities for growth, especially as both companies expand their use of AI across their platforms.
And even better, both companies pay dividends, providing shareholders with a small income stream as their growth stories continue to unfold.
But which stock is a better buy today? Let’s explore that question.
Alphabet Cl A (GOOGL)
Alphabet is a multinational technology company that owns and operates many popular properties like Google, YouTube, and the Android ecosystem. Beyond that, the company has a solid presence in the cloud market through Google Cloud and is investing heavily in artificial intelligence, cybersecurity, quantum computing, and other emerging technologies.
GOOGL stock is up 94% in the last 52 weeks and 13% away from its 52-week high of $408.61.
META Platforms (META)
On the social media side, Meta operates some of the world’s most widely used platforms, including Facebook, Instagram, WhatsApp, Messenger, and Threads. Advertising remains its main source of revenue, while the company also invests in AI, virtual reality, and smart devices.
Despite falling 5.5% over the past 52 weeks, META stock trades at $664 today and is about 17% below its recent high.
How Alphabet and Meta are turning AI into growth
AI has many applications, and Alphabet and Meta deploy it in different ways.
Alphabet has already integrated AI across much of its ecosystem. Gemini, its native AI platform, is built into Google Search and Workspace, while Google Cloud offers AI tools and computing services to businesses. Other platforms, including YouTube, also use their AI to improve recommendations and the user experience.
Meanwhile, Meta takes a more focused approach by integrating AI across its social media and advertising platforms. The technology powers content recommendations and improves ad targeting based on user activity. Meta is also extending AI beyond screens through its Ray-Ban and Oakley smart glasses, giving users a more direct way to interact with the technology.
Simply put, Alphabet has more ways to monetize AI across its businesses, while Meta is concentrated on technology that can quickly support user activity and ad revenue.
Which company has the stronger financial base?
With that, let’s look at how these companies' initiatives affected their latest quarterly financials:
| Metric | Alphabet | Meta |
| Sales | $109.9 billion (+21.8% YOY) | $56.3 billion (+33.1% YOY) |
| Net income | $62.6 billion (+81.2% YOY) | $26.8 billion (+60.9% YOY) |
| Operating cash flow | $45.8 billion | $32.2 billion |
| Forward P/E | 25.11x | 22.47x |
Alphabet remains the larger and more profitable company, with sales rising ~22% YOY to $109.9 billion. However, Meta delivered the stronger growth rate over the same period, increasing 33% to $56.3 billion.
However, Alphabet leads in net income growth, up 81.2% to 62.6 billion, versus Meta’s 61%.
Cash generation also favors Alphabet, which produced $45.8 billion, compared with Meta’s $32.2 billion, reflecting the strength of its more diversified digital ecosystem.
Turning to the forward price-to-earnings (P/E) ratio, we see that Meta is trading at 22x. This valuation metric shows how much investors are paying per dollar of the company’s projected earnings over the last 12 months. The lower the number, the better, though I want to point out that both companies have higher P/E ratios than the 15x sector median. So they’re not exactly considered cheap.
How safe are Alphabet's and Meta’s dividends?
Alphabet and Meta only began paying dividends in 2024, and they’re both tech companies and built for growth. In other words, don’t expect their yields to match those of longtime dividend payers like PepsiCo or Altria- at least any time soon.
Alphabet pays a forward annual dividend of $0.88, which translates to a yield of around 0.24%. The company also has a 6.34% dividend payout ratio, which means the majority of its income is reinvested in growth, again, very common for a tech company.
Meanwhile, Meta pays $2.10 per share per year, which translates to an annual yield of approximately 0.32%. Like Alphabet, Meta reinvests most of its income back into the business.
Wall Street’s opinion on Alphabet and Meta
Now let’s take a look at what Wall Street says.
The analysts are bullish on GOOGL stock, with 53 rating it a “Strong Buy”. Its mean-to-high target prices suggest between 22% and 45% upside potential over the next year.
Meanwhile, META stock reflects a similar sentiment, with a consensus of 53 analysts also rating it a “Strong Buy,” though its low-to-high target price range implies a potential upside of 5% to 53% over the next 12 months.
Final thoughts
Alphabet and Meta are both at the forefront of the AI boom. Both companies have large user bases and strong innovation pipelines, which explains why they continue to make headlines - and attract investors. I own both stocks, but, if I had to choose one, Alphabet would be my first choice, at least considering all that I've provided above. Meta may offer faster growth today, but Alphabet’s broader ecosystem gives it more ways to win over the long run.
On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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