Shares of digital advertising companies rose significantly today after recent earnings reports from Alphabet Inc. (NASDAQ:GOOGL), Reddit, and Snap Inc. (NYSE:SNAP) showed strong advertising demand. This positive trend comes ahead of the important holiday shopping season and signals the strength of the digital advertising market.
Alphabet’s stock rose 6% in pre-market trading after the earnings release. Shares of Reddit soared 23%, while Snap, the parent company of Snapchat, rose 13.4%. Collectively, these companies are expected to increase market capitalization by more than $70 billion.
These positive results are also a good sign for other companies that rely heavily on advertising revenue. Meta Platforms Inc. (NASDAQ:META), Amazon.com (NASDAQ:AMZN (NASDAQ:)), and Pinterest Inc. (NYSE:PINS) also benefited from this optimism, with shares rising between 1.9% and 2.5%. .
MoffettNathanson analyst Michael Nathanson expressed confidence in the strength of the digital advertising market and expected this momentum to continue into the fourth quarter. He specifically noted that Amazon.com and Meta “are likely to perform well.”
Alphabet’s strong performance was due not only to strong ad sales, but also to rapid growth in its cloud business driven by artificial intelligence (AI). Additionally, as Google business leader Philipp Schindler noted on Tuesday, election-related ads were particularly prominent on YouTube ads, helping performance.
The impact of political advertising is significant. According to a report released earlier this year by Insider Intelligence, U.S. political advertising spending in 2024 is expected to increase by about a third compared to the previous presidential election year, with digital media expected to account for about 28%.
Snap reported that improved advertising features have attracted more marketers to the Snapchat app, and it has leveraged AI to improve the accuracy of ad targeting. Reddit, which recorded its first quarterly surplus, is also benefiting from AI, expanding its user base globally through content licensing agreements and multilingual translation of content through machine learning.
This article was written with contribution from Reuters.
This article was translated with the help of artificial intelligence. Please refer to the Terms of Use for further details.
