Alphabet (GOOG -1.44%) (GOOGL -1.44%), the parent company of Google, is considered to be a sound long-term investment. The tech giant’s stock has rallied more than 480% over the past 10 years as its advertising and cloud businesses has expanded.

From 2014 to 2024, Alphabet’s revenue rose at a compound annual growth rate (CAGR) of 18% as its earnings per share (EPS) increased at a CAGR of 23%. From 2024 to 2027, analysts expect the company’s revenue and EPS to rise 11% and 13%, respectively. But Alphabet’s business is maturing as it faces existential challenges.

Image source: Getty Images.

New generative artificial intelligence (AI) platforms, like OpenAI’s ChatGPT, are changing how people search and challenging its core search engine. ByteDance’s TikTok, Meta Platforms‘ (META -0.22%) Reels, and other short video platforms are chipping away at YouTube. Independent ad tech platforms like The Trade Desk are pulling away Alphabet’s advertisers, and Google has yet to establish a meaningful presence in the social media, e-commerce, or hybrid “social shopping” markets. It also ranks a distant third in the cloud infrastructure market behind Amazon Web Services (AWS) and Microsoft Azure.

Alphabet also faces intense pressure from antitrust regulators. The U.S. Department of Justice (DOJ) wants Google to divest Chrome, the world’s most popular web browser, because it collects a lot of user data that reinforces its dominance of the search and targeted advertising markets. In addition, the DOJ wants to restrict how Google promotes its services on Android.

Those divestments and restrictions could exacerbate the company’s slowdown and erode its defenses against Microsoft and Amazon in the growing cloud and AI markets. If Alphabet doesn’t counter those challenges, it might turn into a slower-growth tech company like IBM over the next decade. If that happens, one less valuable “Magnificent Seven” tech company — Meta Platforms at $1.35 trillion — might eclipse Alphabet’s market cap of $1.95 trillion within the next 10 years.

Meta faces fewer long-term challenges than Alphabet

Meta, which owns Facebook, Instagram, Messenger, and WhatsApp, is the largest social networking company in the world. It served 3.35 billion daily active users across its entire family of apps at the end of 2024. That’s 40% of the world’s entire population and a 5% increase from its 3.19 billion daily active users at the end of 2023.

From 2014 to 2024, Meta’s revenue and EPS increased at a CAGR of 29% and 36%, respectively. It grew faster than Alphabet because it dominated the growing social media market, changed how people interact with each other, and leveraged all of that accumulated data to craft effective targeted ads. Its acquisitions of Instagram in 2012 and WhatsApp in 2014 expanded that ecosystem and locked in its users.

From 2024 to 2027, analysts expect Meta’s revenue and EPS to grow at a CAGR of 13% and 11%, respectively. That growth rate might seem comparable to Alphabet’s, but Meta faces fewer near-term challenges. It’s countering TikTok with Reels, using AI to place more ads, and drawing more small merchants to open their stores on Instagram to establish a presence in the social commerce market. It’s also established an early mover’s advantage in the nascent virtual and augmented reality markets.

Why Meta might become more valuable than Alphabet

Meta and Alphabet trade at a respective 21x and 18x this year’s earnings. Let’s assume both companies match analysts’ estimates, continue growing their EPS at a CAGR of 10% from 2027 to 2035, and trade at 20 times forward earnings. If that happens, this is how much Meta and Alphabet could be worth by the beginning of 2035:

Data source: Marketscreener.

However, those estimates assume that Meta’s growth won’t significantly accelerate and Alphabet won’t be disrupted in the AI, cloud, and advertising markets. If Alphabet matches Wall Street’s estimates through 2027 — but only grows its EPS at a CAGR of 5% over the following eight years and trades at 15 times forward earnings by the beginning of 2025 — its stock price could only rise 65% to $257 and boost its market cap to $3.22 trillion.

However, if Meta matches analysts’ expectations through 2027, grows its EPS at a faster CAGR of 15% through 2035, and trades at 25 times forward earnings, its stock price could rise nearly 380% to $2,514 per share and drive its market cap to $6.47 trillion.

It’s all speculation for now

It’s impossible to tell if Meta will actually be worth more than Alphabet by 2035, since a lot of things might happen over the next 10 years. But Meta has more irons in the fire than Alphabet, which arguably became complacent over the years as it failed to leverage its dominance of the online search market to conquer the social media, e-commerce, short-form video, cloud infrastructure, and generative AI markets.

For now, Meta has a clear shot at overtaking Alphabet over the next decade. However, it might be premature to call Alphabet the “next IBM” and claim its high-growth days are over.