Should you own Meta Platforms or Alphabet?

In the battle of Big Tech advertising giants, Q2 earnings season could be a fork in the road for Meta Platforms and Alphabet. With both stocks soaring throughout 2024, management must deliver on the financial results to reaffirm investors’ optimism.

Loop Capital analyst Rob Sanderson expects Meta Platforms to shine, and he has a Buy Rating on the stock and a $550 price target. He wrote on Jul. 2:

“As AI strategies evolve and product work is being introduced, we are increasingly optimistic about Meta’s position and remain uncertain about Google’s… Google appears to have its hands full in defending its dominant search position, losing share of traditional search queries.”

He also commented:

“Meta has proven to be an innovator and effective fast follower, quickly correcting course on product development in the face of competition and changing market dynamics (i.e. Stories, Reels, early on AI investment). We think the company is better built and battle-tested to leverage disruptive technologies.”

While the debate will be settled when both companies report earnings later this month, you should monitor some key levels to determine if Meta’s technicals remain constructive.

Meta broke out to a new all-time high last week (the horizontal white line), but it needs to confirm the strength this week to ensure it wasn’t a false signal. If a slight pullback occurs, the 5-week moving average (the blue line) has been a key momentum indicator. From the breakout in late 2022 until mid-2023, the 5-week MA largely acted as support as Meta soared. It played a similar role in late 2023/early 2024, and Meta ended last week above the 5-week MA.

Not far behind, the 20-week MA (the yellow line) has largely been long-term closing support during this bull run. As a result, momentum traders should stay bullish above the 5-week MA, while those with longer trading horizons may want to prioritize the 20-week MA.

So, does Meta outpace Alphabet in the second half of 2024, or is the Google parent the better investment?