Ad spending is definitely cyclical, and it's arguable there is complacency on that front.

That said, it wasn't that long ago where the space had a total washout (2022), and despite markets being relatively richly valued, the mega-cap ad companies have only gotten a strong bid more recently (institutional money has actually been under-exposed to the large tech names ex-NVIDIA based on historical look back). Google was actually near value territory until recently.

It's hard to predict how sustainable at all is though. One of the big factors is that these companies had a lot of intangible value that they could pull from. Ex: Meta could monetize Whatsapp, Google could actually ban YouTube ad-blockers (hey, they finally forced me to subscribe), and these companies also have some pricing power to harvest if needed. Then there is a layoff angle, which may not be great for their long-term success, but they have the power to lighten up and route massive buybacks if they ever want to focus on stock price (see META post 2022).

The other poster commenting about the sheer size of these companies is right too. The passive investing complex drives ever more money into ever bigger companies. Then you have trend following money (and most investors are trend following to some degree) reinforce those flows, and it creates a virtuous cycle ever upwards. On the sustainability question, it does look like quite a self perpetuating cycle but there's the caveat that these flows can reverse. If money were to flow out of US markets on net, such as the mega sell off earlier this year with 7% down days, then the piper is paid.

So to break it down, it's sustainable as long as American financial exceptionalism remains strong, and as long as these companies don't exhaust the levers that they can pull. Nonetheless, advertising is cyclical, and sometime in the future, you can guarantee that there will be another cycle of pessimism combined with weaker earnings (both of which combined to cause a major earnings contraction in a sector). When that happens, well that's not so easy to predict. In the meantime, these companies have pretty huge cash flows.