Both Facebook and Google spiked last week following their earnings reports, but both companies have since come back down to earth. The two companies compete in digital advertising, but which faces a greater opportunity? Morgan Stanley analysts like Facebook better than Google.

Facebook posts solid earnings

In a video released this week, Morgan Stanley analysts Brian Nowak noted that Facebook’s ad revenue beat their estimates by about 3%, while its adjusted EBITDA beat their estimate by about 2%. He also pointed out that operating expenditures were slightly higher than they expected and that management just lowered the top part of the range slightly for the full year. (All graphs in this article are courtesy Morgan Stanley.)

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Further, he called engagement on Facebook “very strong, as the social network added 46 million daily users, which was the most they have added in a quarter in a couple of years. He said Facebook continues to convert more and more monthly users to daily users, and as a result, “They’re getting more use, more engagement and more data about their users to monetize and their monetizing them well too because if you look at the constant currency growth in advertising dollars per user we actually saw an acceleration across three of the four regions around the world.”

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He called this process a “double-barreled attack on the advertising ecosystem.”

Google also posted solid earnings

Google’s earnings report also showed a better than expected topline result, and Nowak said it was mostly because of Google Websites rather than Search. He noted that there’s more and more evidence that Search is slowing. Another big area of growth was YouTube, which he believes is “ramping well” and may be accelerating.

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Nowak also highlighted the apparent deceleration on the Search side of things in the U.S. and the U.K., which are two of Google’s more mature markets, on a constant currency basis. He said he thinks investors are not fully appreciating what looks like a steady deceleration in Search.

“If you run some numbers on the U.S., and you look at what we think the mix is of YouTube, which we think is about 11% of the business, growing 35%, Play and Other, the O & O business. In aggregate, you’re not left with a whole lot of growth for Search where it implies in the first quarter, the core Search product probably only grew about 6%.” He noted that they said 8% because there’s a headwind of 150 basis points from the loss of the deal with Mozilla.

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Facebook preferred over Google

Nowak also said they prefer Facebook because they see “more and more users and more and more dollars coming out of the platform.” Further, he said they worry that Google doesn’t have much of a chance to beat estimates and that investors still don’t really appreciate how much Search is slowing.

Fellow Morgan Stanley analyst Benjamin Swinburne said, “One of the things we’ve been talking about is digital deflation, and these are two companies really driving that. We’ve also noted that our regression analysis suggests that U.S. advertising might actually not grow at all in 2015.”

He suggested that this year could be a “GDP-minus” year for U.S. advertising, which he added is very unusual in a non-recession year. He also pointed out that while YouTube is accelerating, its lower cost per click is placing downward pressure on TV ad pricing.

Meanwhile Facebook grew its North America revenue 53% to $1.6 billion in the first quarter, and Swinburne pointed out that this amounts to 20% of the annualized total cable TV ad spend, demonstrating that Facebook is one of just a few companies that are actually growing.

As of this writing, shares of Facebook were down 1.04% to $81.07 per share, while Class A shares of Google were down 0.1% to $565.58 per share.