JPMorgan drops Alphabet from focus list, adds Meta on AI advertising gains Louis Juricic Mon, November 9, 2026 at 8:59 AM EST 4 min read META +5.20% JPM +0.83% GOOG +2.60% AMZN +5.11% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Investing.com -- JPMorgan has removed Alphabet from its Analyst Focus List and added Meta Platforms, betting that AI-driven advertising gains and emerging monetization opportunities make Meta the more attractive internet stock.
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Analyst Doug Anmuth said the bank remains Overweight on Alphabet but sees stronger near-term earnings momentum at Meta following third-quarter results. Amazon and Meta are now JPMorgan's preferred picks across its internet coverage.
"Coming out of 3Q earnings, Meta's relative advertising strength is more evident than ever," Anmuth wrote in a November 9 note.
Meta's advertising revenue jumped 26% year over year in the third quarter, with North American growth accelerating to 33%. The company generated approximately $13 billion in incremental advertising revenue, roughly twice the additional dollars generated by Google Search, JPMorgan estimated. The bank expects Meta's Family of Apps advertising revenue to surpass Google Search in the fourth quarter and beyond.
JPMorgan attributed Meta's strength to AI-driven improvements in ad retrieval, ranking and targeting, which are boosting advertiser conversions. Its large advertiser base and exposure across industries also provide some insulation from weakness in specific advertising categories.
Beyond its core advertising business, the bank sees potential in Meta's AI products. Its Muse assistant has attracted 10 million sign-ups in the U.S. and Canada, with a 25% daily-to-monthly active user ratio. Anmuth also highlighted the enterprise opportunity for Meta Model API and Muse Code.
Alphabet's AI monetization challenge
Alphabet's removal from the list reflects concerns about the pace of AI monetization rather than a deterioration in JPMorgan's overall view. The bank reiterated its Overweight rating but warned that improvements in AI-powered search monetization could take time.
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Google Search revenue growth slowed to 12% in the third quarter, from 19% in the first quarter and 17% in the second, despite Google reporting its fastest query growth in five years. Management cited foreign exchange as the largest factor behind the deceleration, alongside weaker spending from Asian retailers following changes to the EU's de minimis exemption and reduced media and entertainment spending after the World Cup.
Investors must now assess whether Google's AI Mode can generate comparable advertising economics to traditional search. While longer, more contextual queries could improve advertiser conversions, AI agents could also consolidate multiple searches into a single transaction, reducing advertising opportunities while increasing computing costs.
JPMorgan also flagged pressure on Alphabet's cash flow from its AI infrastructure spending. Free cash flow was negative for a second consecutive quarter, while management maintained its 2026 capital expenditure forecast of $195 billion to $205 billion and said spending would increase significantly in 2027.
Google Cloud remains a bright spot, with revenue surging 103% year over year and backlog reaching $561 billion. However, the bank cautioned that TPU system sales contributed meaningfully to growth, without a separate disclosure of their revenue and margins. It also expects margins to face pressure from additional computing capacity arrangements through at least the first quarter of 2027.
Cloud growth offers evidence of AI returns
JPMorgan sees increasingly tangible returns from AI investments across the internet sector, particularly in cloud computing and advertising.
AWS revenue grew 39% year over year in the third quarter, while Google Cloud expanded 103%. Their combined backlogs exceeded $1.1 trillion, providing substantial visibility into future demand. Amazon now expects AWS revenue growth of more than 40% in both 2027 and 2028.
For JPMorgan, however, Meta offers a more immediate way to capture AI returns. Its technology is already improving the economics of its core advertising business, while new consumer and enterprise products offer additional growth opportunities.
The bank's revised Analyst Focus List is now Amazon and Meta, leaving Alphabet Overweight but no longer among its preferred internet stocks.
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