Alphabet(GOOG) The Motley Fool·2025-04-19 21:04Core Viewpoint - Meta Platforms has the potential to surpass Alphabet in market capitalization within the next decade due to its stronger growth trajectory and fewer long-term challenges [5][12]. Group 1: Alphabet's Performance and Challenges - Alphabet's revenue grew at a compound annual growth rate (CAGR) of 18% from 2014 to 2024, with earnings per share (EPS) increasing at a CAGR of 23% [2]. - Analysts project Alphabet's revenue and EPS growth to slow to 11% and 13%, respectively, from 2024 to 2027 [2]. - The company faces significant competition from new generative AI platforms and social media, which are eroding its core search engine and advertising business [3]. - Alphabet is under pressure from antitrust regulators, with the U.S. Department of Justice seeking to divest Chrome and restrict service promotions on Android [4]. - If Alphabet fails to address these challenges, it risks becoming a slower-growth company similar to IBM [5]. Group 2: Meta's Growth and Market Position - Meta's revenue and EPS increased at a CAGR of 29% and 36%, respectively, from 2014 to 2024, outpacing Alphabet due to its dominance in social media [7]. - Meta's user base reached 3.35 billion daily active users by the end of 2024, representing 40% of the global population [6]. - From 2024 to 2027, Meta's revenue and EPS are expected to grow at a CAGR of 13% and 11%, respectively, with fewer immediate challenges compared to Alphabet [8]. - Meta is actively countering competition from TikTok and expanding into social commerce and virtual/augmented reality markets [8]. Group 3: Market Capitalization Projections - Current earnings multiples show Meta trading at 21x and Alphabet at 18x this year's earnings [9]. - If both companies grow their EPS at a CAGR of 10% from 2027 to 2035, Meta could reach a market cap of 6.20 trillion [10]. - If Meta accelerates its EPS growth to 15% through 2035, its market cap could rise to $6.47 trillion, potentially surpassing Alphabet [11].