Shares of Meta Platforms (META 2.48%) have advanced 13% year to date, bringing its market value to $1.6 trillion. Meanwhile, shares of Google parent Alphabet (GOOGL 1.45%) (GOOG 1.49%) have advanced 64%, bringing the company's market value to $3.7 trillion. Three top hedge fund managers bought both stocks in the third quarter.
- Israel Englander of Millennium Management added 793,500 shares of Meta Platforms and 2.2 million shares of Alphabet. Both stocks rank among his top 10 holdings.
- Ken Griffin of Citadel Advisors added 1.4 million shares of Meta Platforms and 2 million shares of Alphabet. Both stocks rank among his top 10 holdings.
- Philippe Laffont of Coatue Management added 355,000 shares of Meta Platforms and 7.2 million shares of Alphabet. Both stocks rank among his top three holdings.
Importantly, all three hedge fund managers handily outperformed the S&P 500 (^GSPC 1.27%) over the past three years, which makes them good sources of inspiration. But the trades mentioned took place in the third quarter, which ended several months ago. Here's a more current look at Meta Platforms and Alphabet.
Image source: Getty Images.
1. Meta Platforms
Meta has a strong presence in two industries: digital advertising and smart glasses. It owns three of the four most popular social media networks, which lets it collect user data and target media content. That advantage has made Meta the second-largest ad tech company in the world. But the company has also taken an early lead in the nascent smart glasses market.
JPMorgan Chase analyst Dough Anmuth recently wrote, "Meta is in rarified air across the combination of scale, growth, and profitability, as the company's massive reach and engagement continue to drive network effects, and its targeting abilities provide significant value to advertisers."
Meta is leaning on artificial intelligence (AI) -- from custom semiconductors to proprietary large language models -- to strengthen that network effect by boosting engagement and ad conversion rates across its social media properties. CEO Mark Zuckerberg told analysts, "Our AI recommendation systems are delivering higher quality and more relevant content," leading to more time spent on Instagram, Facebook, and Threads.
Meta Platforms is also developing a superintelligence system to integrate with its augmented reality smart glasses. CEO Mark Zuckerberg says glasses will be our "primary computing devices" in the future. If he is correct, Meta -- which accounted for 73% of smart glasses shipments in the first half of 2025 -- could become a consumer electronics giant in the 2030s.
Wall Street expects Meta's earnings to increase at 17% annually over the three years. That makes the current valuation of 29 times earnings look quite reasonable. Indeed, among 71 analysts, Meta has a median target price of $842 per share. That implies 27% upside from its current share price of $661.
NASDAQ: META
Key Data Points
2. Alphabet
Alphabet is the largest ad tech company in the world because of its ability to engage consumers with Google Search and YouTube. The company is leaning on AI to better monetize those web properties. AI Overviews and AI Mode have increased query volume on Google Search, and generative AI tools are helping YouTube influencers create, edit, and optimize content.
Alphabet has also developed an application called Gemini, a generative AI assistant built on a family of large language models of the same name. Gemini now has over 650 million monthly active users, and it ranks as the second most popular AI assistant behind ChatGPT. Alphabet does not sell ad inventory on the platform yet, but the company can certainly pull that lever in the future.
Meanwhile, Alphabet's Google Cloud is the third largest public cloud by infrastructure and platform services spending, and it gained 2 percentage points of market share in the last two years due. Consultancy Gartner recently ranked Google as the most capable cloud platform for AI application development, and Forrester Research ranked it as a leader in LLMs.
That praise suggests further market share gains are likely. Indeed, total cloud sales increased 34% in the third quarter, the second consecutive acceleration, driven by strong demand for Google's custom AI chips (called TPUs) and generative AI models. Morgan Stanley analysts estimate Google Cloud revenue growth will accelerate to 44% in 2026.
Wall Street expects Alphabet's earnings to increase at 15% annually over the next three years, which makes the current valuation of 30 times earnings look tolerable. Among 75 analysts, Alphabet has a median target price of $330 per share. That implies 6% upside from its current share price of $310. Investors can buy a small position today if they feel so inclined, but I think Meta is the more attractive of the two stocks.
