From Nasdaq:

Alphabet and Meta Platforms reported fourth-quarter earnings. Alphabet’s ad revenue disappointed, sending shares lower. But Meta Platforms exceeded estimates, moving the stock 20% higher immediately after the announcement, while Meta’s stock performance has been stronger than Alphabet’s in the past year.

Both Alphabet and Meta Platforms dominate their industries, with a 91% share in the global search market and 4 billion monthly active users for Meta. This strong market position and large user base contribute to their economic moats.

Alphabet’s sales rose by 9%, and Meta’s sales jumped by 16% last year. Both companies have the potential to register double-digit sales growth in the future, with digital advertising revenue expected to increase by 14% per year in the U.S. until 2030.

Alphabet and Meta also have other potential growth drivers, such as Google Cloud and metaverse investments, contributing to anticipated higher revenue and earnings growth in the future. This growth is supported by strong operating margins.

Alphabet shares sell for a forward P/E ratio of 21.5, while Meta’s P/E ratio is 23.4. These valuations are compelling, especially considering their dominant industry positions, growth prospects, and profitability.

The Motley Fool Stock Advisor team has identified 10 best stocks for investors to buy now, and neither Alphabet nor Meta were included. However, Stock Advisor has consistently outperformed the S&P 500 since 2002.

Randi Zuckerberg, a former director of market development for Facebook, and Suzanne Frey, an executive at Alphabet, are members of The Motley Fool’s board of directors. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, and Microsoft.



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