Two Undervalued AI Stocks That Could Power the Next Bull Market

The artificial intelligence revolution has already transformed numerous sectors, yet some of the biggest tech companies remain surprisingly affordable. With the S&P 500 on track for impressive gains and entering its third year of this bull market, history suggests momentum could extend further. However, savvy investors should look beyond near-term trends and identify companies with staying power through multiple market cycles. The encouraging reality is that two major AI-focused players in the Magnificent Seven remain trading at valuations that significantly underestimate their potential, offering compelling entry points for long-term wealth builders.

Why These Cheap AI Stocks Still Represent Strong Value

The AI market is projected to balloon from its current $300 billion valuation to approximately $2 trillion by the early 2030s—a stunning expansion that most analysts expect will benefit technology leaders for years to come. Yet despite the enormous growth opportunity, two established tech giants have somehow managed to remain cheaper than their peers. Meta Platforms trades at just 26x forward earnings—a notable discount from the 30x it commanded only months ago—while Alphabet trades at 29x forward earnings. Both valuations appear attractive for companies positioned at the forefront of artificial intelligence development and deployment.

What makes this opportunity particularly intriguing is that these aren’t speculative startups, but rather multi-billion-dollar revenue generators with proven business models. They’re not trading cheap because they’re struggling; rather, the market appears to be undervaluing their transformation into AI leaders.

Meta Platforms: Social Dominance Meets AI Ambition

Meta has become the most affordably priced of the Magnificent Seven tech stocks, making it worth examining more closely. The company’s pivot toward AI reflects a strategic commitment to leverage this transformative technology across its entire ecosystem.

Meta’s development of Llama—a sophisticated large language model—represents a core pillar of this strategy. Rather than viewing AI as a separate venture, Meta is actively integrating it into its advertising infrastructure, which is central to how the company generates revenue. As a social media powerhouse controlling Facebook and Instagram, Meta possesses something competitors desperately want: direct access to billions of users advertisers need to reach.

The potential synergy is powerful: when advertisers observe improved ad performance driven by AI optimization, they typically increase spending. This virtuous cycle could translate into sustained revenue acceleration. Additionally, Meta’s substantial earnings base provides the financial firepower to invest heavily in AI infrastructure while simultaneously returning capital to shareholders through dividends—a balanced approach that few tech companies can maintain.

Meta’s strong historical return on invested capital demonstrates management’s ability to generate real value from major technology bets, suggesting their AI investments could produce similar returns.

Alphabet: Leveraging Search Supremacy and Cloud Expansion

Alphabet presents a remarkably similar story with distinct competitive advantages. The company has constructed an advertising empire worth tens of billions annually through Google Search, which remains the undisputed market leader in internet search. This dominant position ensures that advertisers continue funneling resources into Alphabet’s platform—a relationship that recently culminated in the company’s first-ever $100 billion quarterly revenue figure.

Beyond search, Alphabet operates Google Cloud, a rapidly growing division that serves enterprises with diverse AI-enabled products and solutions. The company developed Gemini, its own powerful language model, and strategically offers access to this critical AI tool across its customer base, positioning itself as both a consumer AI innovator and enterprise AI provider.

Remarkably, despite these achievements and clear AI leadership, Alphabet remains trading at a bargain multiple of just 29x forward earnings. As the AI market expands from its current scale to reach the projected trillion-dollar territory over the coming decade, Alphabet’s established search dominance, cloud infrastructure, and AI capabilities position it to capture an outsized share of this growth.

The Strategic Case for Accumulating Positions

The combination of factors supporting these two stocks is noteworthy. Both Meta and Alphabet are:

• Already generating growth from AI investments in their core businesses, unlike companies betting entirely on future developments
• Trading at valuations that substantially discount their AI opportunity, offering downside protection and upside potential
• Generating tremendous earnings that fund ongoing innovation without straining finances
• Operating in defensible market positions (social media and search) that aren’t easily disrupted by newcomers
• Investing billions in proprietary AI models that strengthen competitive moats

While the broader market has recognized the AI opportunity, pricing in some of the upside across the tech sector, these two companies appear to be exceptions—vehicles for long-term wealth accumulation at reasonable prices. The next phase of the bull market could very well be powered by cheap AI stocks like these that combine proven business models with transformative technology adoption.

For investors building portfolios designed to weather multiple market cycles while capturing secular growth trends, both Meta Platforms and Alphabet merit serious consideration as undervalued positions in the AI-driven future.