By Mackenzie Tatananni

Shares of Meta Platforms and Reddit were rising Friday on the back of strong earnings at Alphabet, with the advertising heavyweight's latest financials serving as a reassuring sign for other companies that rely on digital ad revenue.

Alphabet's first-quarter print on Thursday highlighted growth in its advertising business. Segment revenue climbed to $66.9 billion from $61.7 billion a year earlier. The Google parent also cited strength in its YouTube ads business, which rose to $8.9 billion from $8.1 billion in 2024.

Cantor analyst Deepak Mathivanan noted Thursday that Alphabet generates revenue "primarily by delivering relevant, cost-effective online advertising."

The company's incorporation of artificial intelligence tools in ad products also continued to deliver "healthy results," Mathivanan said, noting that businesses using Google's Demand Gen suite saw a 26% year-over-year increase in conversions per dollar spent.

In the case of Meta, advertising comprises the vast majority of the company's revenue. Its Ad revenue came to $160.6 billion last year, up 22% from the previous year, and composed the bulk of the total $164.5 billion revenue in 2024.

Shares of the Instagram and Facebook owner were up 2.5% in premarket trading while futures tracking broad market indexes were falling.

Meta's gains also come on the heels of the latest update to Threads, the company's answer to Twitter. Meta said Wednesday that it was expanding access for advertisers on the platform, building on an initiative it began testing in select regions earlier this year.

Reddit stock was up 2.9%. Its ad revenue grew 50% to $1.2 billion in 2024, accounting for most of Reddit's $1.3 billion total revenue in the year.

Pinterest is similarly dependent on advertising. The social-media platform makes money through affiliate marketing as well as so-called promoted pins, or discreet ads that resemble user-generated content. Shares were up 2.6% on Friday.

AppLovin was another notable gainer, rising 2.4%. The company operates a mobile marketing platform that offers solutions for analytics and monetization.

Alphabet itself was up 3.9% in premarket trading. Futures tracking the benchmark S&P 500 and tech-heavy Nasdaq Composite were down 0.2% and 0.3%, respectively.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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April 25, 2025 08:14 ET (12:14 GMT)

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