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Alphabet vs. Snap: Which Digital Advertising Stock Has an Edge?
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Key Takeaways
Alphabet's AI-driven Search and YouTube ads strengthen engagement and advertiser appeal.
Snap's commerce-driven ad volume jumped 39% year over year in the second quarter of 2025.
Alphabet stock is up 61.5% year to date, while Snap has plunged 26.1% over the same period.
Alphabet (GOOGL - Free Report) is a behemoth in the digital advertising market, in which Snap (SNAP - Free Report) 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 Stock
Alphabet’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 Stock
Snap’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 South
The 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.
Year 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
Conclusion
Alphabet 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).
Image: Bigstock
Alphabet vs. Snap: Which Digital Advertising Stock Has an Edge?
Key Takeaways
Alphabet (GOOGL - Free Report) is a behemoth in the digital advertising market, in which Snap (SNAP - Free Report) 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 Stock
Alphabet’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 Stock
Snap’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 South
The 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 Snap
Year 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
Conclusion
Alphabet 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.