META

Reddit (RDDT) is positioned as offering greater upside potential than Meta Platforms (META) in the digital advertising space, driven by strong 64% year-over-year advertising revenue growth, successful product innovations like Reddit Max AI tool, and 50% increase in new user retention. Meta, while maintaining dominance with $63.1 billion in Q3 2026 ad revenues, faces headwinds from rising AI infrastructure costs, 68% expense surge, and regulatory pressures that limit growth prospects.

Meta reported Q3 2026 revenues of $64.6B, up 26% YoY, driven by strong advertising demand with ad impressions up 10% and average ad prices up 14%. However, operating margin contracted to 20% from 40% due to a $9.89B legal charge and increased AI infrastructure spending. The company launched its Muse AI agent with over 10 million users and expects continued growth through 2027, though capital expenditures surged to $34.91B, resulting in negative free cash flow.

Meta Platforms reported Q3 2026 revenue of $64.6 billion, up 26.1% year-over-year, beating consensus estimates by 1.88%. EPS of $7.40 exceeded expectations by 13.5%.

Key metrics showed strong performance in advertising revenue across all regions, though Reality Labs revenue declined 5.7% YoY. The stock has a Zacks Rank #3 (Hold) rating and declined 5.8% over the past month.