META Rides on Ad Growth: Can It Stay Ahead of RDDT and SNAP?

Meta Platforms META is benefiting from strong growth in its advertising business, strengthening its competitive position against Reddit RDDT and Snap SNAP. The company’s AI-driven ad tools, expanding user engagement and large advertiser base continue to drive higher ad spending across its family of apps. 

In the second quarter of 2026, Meta reported $59.4 billion in ad revenues, up 27% year over year, with a 14% increase in ad impressions and a 12% rise in average price per ad. This growth is underpinned by Meta’s ability to deliver highly engaging experiences across its platforms, which include Facebook, Instagram, WhatsApp and Threads, reaching 3.6 billion daily active users.

A key driver behind this success is Meta Platforms’ investment in artificial intelligence, particularly large language models that enhance content recommendations and ad targeting. These AI-powered systems allow Meta Platforms to show more relevant content and ads, resulting in higher conversions and better performance for advertisers. 

In the second quarter of 2026, the deployment of Meta Generative Recommender and other advanced models led to an 8.3% increase in ad clicks and a 15.7% uplift in conversions on Facebook. More than 9 million small businesses now use at least one of Meta’s AI-powered ad creative tools. Its Advantage+ AI-powered advertising solutions also surpassed a $75 billion annual revenue run rate in the quarter, highlighting growing advertiser adoption.

Meta expects continued gains from AI-powered recommendations and advertising optimization. With strong user engagement, expanding AI capabilities and a massive advertiser base, META appears well-positioned to maintain its advertising momentum and stay ahead of RDDT and SNAP. For the third quarter of 2026, Meta expects revenues between $61 billion and $64 billion.

How Competitors Fare Against META

Despite Meta Platforms’ expanding portfolio, the company faces stiff competition from Reddit and Snap. Both companies are expanding their footprint in the rapidly growing digital ad market.

Reddit is benefiting from strong demand in its advertising business, which has become a key growth driver of the company’s impressive financial performance and future growth prospects. In the second quarter of 2026, Reddit’s advertising revenues grew 64% year over year to $762 million, outpacing even its impressive total revenue growth of 61%. This growth is broad-based, with strength across various sales channels, including large customers, mid-market and small and medium-sized businesses.

Snap’s strong advertising revenue has been a major growth driver for the company. In the second quarter of 2026, Snap’s advertising revenues rose 9% year over year to $1.28 billion, reflecting improved momentum with large advertisers in North America, broader adoption of the company’s AI-powered Smart Campaign Solutions and continued strength among small and medium-sized businesses.

META’s Share Price Performance, Valuation, and Estimates

META’s shares have lost 16.7% in the year-to-date period, underperforming the broader Zacks Computer & Technology sector’s return of 15.6%.

META Stock Performance

Image Source: Zacks Investment Research

META shares are cheap, with a forward 12-month Price/Sales of 4.87X compared with the Computer & Technology sector’s 6.36X. META has a Value Score of B.

META Valuation

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for 2026 earnings is pegged at $31.90 per share, which has decreased 3.47% over the past 30 days. This suggests 35.80% year-over-year growth.

Meta Platforms, Inc. Price and Consensus

Meta Platforms, Inc. price-consensus-chart | Meta Platforms, Inc. Quote

Meta Platforms currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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