AI Turbocharges Big Tech’s Ad Revenue, While Smaller Players Struggle to Keep Pace
Artificial intelligence has become a major catalyst for digital advertising growth, propelling industry giants like Meta and Alphabet to deliver quarterly sales and earnings that exceeded market forecasts.
Meta CEO Mark Zuckerberg credited AI for driving “greater efficiency and gains across our ad system,” helping push second-quarter revenue up 22% year-over-year to $47.52 billion. Meta CFO Susan Li noted that the online ad market has strengthened since April, with a rebound in spending from Asia-based e-commerce companies and increased activity from small North American advertisers.
Tech analyst Gil Luria pointed out that strong consumer spending continues to fuel the ad sector’s momentum. Industry experts, including eMarketer’s Jasmine Enberg, added that companies can invest heavily in AI when their core business is healthy and already benefiting from prior AI-driven improvements.
The spending surge shows no sign of slowing: Alphabet boosted its 2025 capital expenditure forecast by $10 billion to $85 billion, while Meta raised its own guidance to between $66 billion and $72 billion. Investors welcomed these moves, confident in the companies’ continued growth.
Outside the mega-cap arena, Reddit reported standout results with $500 million in Q2 sales — a 78% increase from last year — lifting its stock by as much as 20%. This recovery was a stark contrast to Snap and Pinterest, both of which posted underwhelming earnings. Snap’s revenue rose just 9% and was impacted by a flawed ad platform update, while Pinterest faced tariff-related concerns and softer U.S. ad spend from Asian retailers.
The results underscored a growing divide: in a climate of economic uncertainty, advertisers often gravitate toward the largest and most reliable digital platforms, leaving smaller players with far less margin for error.
