Meta Platforms, the parent company of Facebook, Instagram, Messenger, and WhatsApp, has solidified its position as the world's largest social networking entity, boasting an impressive 3.35 billion daily active users at the close of 2024. This staggering number represents approximately 40% of the global population, reflecting a notable 5% increase from the 3.19 billion daily active users reported at the end of 2023.

However, as Meta continues to expand its user base, Alphabet, the parent company of Google, faces significant challenges. The potential divestments and regulatory restrictions imposed on Alphabet could intensify the company's existing slowdown, diminishing its competitive edge against formidable players like Microsoft and Amazon in the rapidly evolving cloud and artificial intelligence sectors. Should Alphabet fail to effectively counter these mounting pressures, it risks transforming into a slower-growth tech enterprise akin to IBM within the next decade. This transition could see Meta, currently valued at $1.35 trillion, surpassing Alphabet's market capitalization of $1.95 trillion in the next ten years.

Adding to Alphabet's woes is the ongoing scrutiny from antitrust regulators. The U.S. Department of Justice (DOJ) is pushing for Google to divest its Chrome browser, the worlds most utilized web browser, due to its extensive data collection practices that reinforce its dominance in search and targeted advertising. Additionally, the DOJ seeks to impose restrictions on how Google promotes its services within the Android ecosystem.

The landscape is further altered by the rise of generative artificial intelligence platformssuch as OpenAI's ChatGPTredefining search paradigms and presenting challenges to Google's core search engine. Compounding this dilemma, ByteDance's TikTok, along with Meta's Reels and other short-form video platforms, are gradually siphoning audiences from YouTube. Moreover, independent advertising technology platforms like The Trade Desk are attracting advertisers away from Alphabet, which has yet to carve out a substantial presence in social media, e-commerce, or the burgeoning hybrid "social shopping" markets. Alphabet also trails significantly in the cloud infrastructure arena, ranking as a distant third behind Amazon Web Services (AWS) and Microsoft Azure.

Examining financial performance, Alphabet witnessed its revenue grow at a compound annual growth rate (CAGR) of 18% from 2014 to 2024, alongside an earnings per share (EPS) increase at a CAGR of 23%. Looking ahead, analysts predict that Alphabets revenue and EPS will rise by 11% and 13% respectively between 2024 and 2027. Nonetheless, as Alphabet's operations mature, the company encounters serious existential challenges.

Conversely, Meta has demonstrated impressive growth, with revenue and EPS climbing at a CAGR of 29% and 36% respectively from 2014 to 2024. This growth trajectory has outpaced Alphabet due to Meta's dominance in the expanding social media realm, its innovative approach to user interaction, and its ability to leverage user data for targeted advertising. The acquisitions of Instagram in 2012 and WhatsApp in 2014 significantly expanded Meta's ecosystem, ensuring user retention.

As we look to the future, analysts anticipate Meta's revenue and EPS growth to decelerate to a CAGR of 13% and 11% respectively from 2024 to 2027. While these growth figures appear comparable to those predicted for Alphabet, Meta faces fewer immediate hurdles. The company is actively countering TikTok's influence through Reels, deploying AI technologies to enhance ad placements, and encouraging small businesses to set up shops on Instagram to tap into the social commerce market. Furthermore, Meta is making strides in virtual and augmented reality, benefiting from first-mover advantages in these emerging sectors.

When comparing valuations, Meta and Alphabet are trading at respective price-to-earnings ratios of 21x and 18x based on this years earnings. If we assume both companies meet analysts' earnings expectations, continue to expand their EPS at a CAGR of 10% from 2027 to 2035, and maintain a trading ratio of 20 times forward earnings, projections for 2035 indicate:

• Meta Platforms: Estimated EPS of $70.45, stock price of $1,409, market cap of $3.63 trillion.
• Alphabet: Estimated EPS of $105.64, stock price of $497, market cap of $6.20 trillion.

However, these projections hinge on the assumption that Meta's growth remains stable and Alphabet's performance in the AI, cloud, and advertising sectors is not significantly disrupted. Should Alphabet meet Wall Street's estimates through 2027 but experience a reduced EPS growth of 5% over the following eight years, while trading at 15 times forward earnings, its stock price could see a modest rise of 65% to $257, bolstering its market cap to $3.22 trillion.

In contrast, if Meta fulfills analysts' expectations through 2027 and accelerates its EPS growth to a CAGR of 15% through 2035, trading at 25 times forward earnings, its stock price could soar by nearly 380% to $2,514 per share, driving its market cap to an astounding $6.47 trillion.

Ultimately, while it remains uncertain whether Meta will truly surpass Alphabet's valuation by 2035, the potential for such a shift exists. Meta's aggressive diversification and innovation strategies provide it with more avenues for growth compared to Alphabet, which appears to have grown complacent over the years, missing opportunities to harness its search dominance to expand into social media, e-commerce, short-form video, cloud infrastructure, and generative AI markets.

Currently, Meta stands at a pivotal juncture, with a legitimate opportunity to surpass Alphabet over the next decade. Nevertheless, it may be too early to label Alphabet the next IBM and claim its days of high growth are definitively over.

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Its worth noting that Suzanne Frey, an executive at Alphabet, and Randi Zuckerberg, a former market development director for Facebook, sister to Metas CEO Mark Zuckerberg, serve on the board of directors for The Motley Fool. Additionally, John Mackey, the former CEO of Whole Foods Marketan Amazon subsidiaryserves on this board as well. Leo Sun holds positions in both Amazon and Meta Platforms, while The Motley Fool maintains and recommends positions in Alphabet, Amazon, IBM, Meta Platforms, Microsoft, and The Trade Desk. The Motley Fool also promotes specific options for Microsoft stock.

In conclusion, the future of both Meta and Alphabet holds considerable intrigue, with potential shifts in their respective market positions as they navigate the complex landscape of technology, user engagement, and regulatory challenges.