Alphabet's strong quarter was boosted by an AI-driven surge in its cloud business and election-related ads. Snap's quarter showed that improved ad features were attracting marketers back to its Snapchat app, with the company using AI to enhance its ad targeting. Reddit, which posted its first quarterly profit, is also benefiting from AI content licensing deals and the use of machine learning for content translation. This trend of AI usage is seen as central to increasing content relevance and enhancing user experience, thereby increasing profit potential for platform operators.
Key takeaways:
- Shares of online ad sellers, including Alphabet, Reddit, and Snap, surged after strong earnings, signalling solid spending from brands ahead of the holiday shopping season.
- Alphabet, Reddit, and Snap are set to add more than US$110 billion combined to their market capitalisations if current gains hold.
- Alphabet's strong quarter was powered by an AI-driven surge in its cloud business and it benefited from election-related ads. Snap's better-performing ad features brought back some marketers to its Snapchat app, and Reddit turned its first quarterly profit, benefiting from AI content licensing deals.
- Nearly half of the 58 analysts covering Alphabet raised their price targets while most of the 17 covering Reddit also lifted their views. Snap saw at least seven price target increases.