Meta and Microsoft: Undervalued AI Investment Opportunities
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 days ago
0mins
Source: Fool
- Meta's AI Potential: Meta is investing in several AI projects, including a plan to deliver a superintelligence platform to the masses; despite its unsuccessful pivot to a metaverse company, its use of AI in social media advertising has resulted in a 33% year-over-year revenue growth, indicating strong business growth potential.
- Microsoft's AI Business Growth: Although Microsoft's stock has dropped over 10% in 2026, its latest fiscal quarter saw an 18% revenue increase, with AI business annual run rate rising 123% year-over-year to $37 billion, demonstrating robust growth in cloud computing and AI demand.
- Undervalued Investment Opportunities: Both Meta and Microsoft's stocks are trading at relatively low valuations, with Meta's P/E ratio and Microsoft's cash flow ratio at their lowest points in the past three years, indicating that the market has not fully recognized their potential growth.
- Strategic Significance of Future Growth: As AI technology continues to evolve, Meta's AI smartglasses and Microsoft's Azure cloud services are expected to deliver substantial returns for investors, especially when market sentiment shifts, leading to potential stock price rebounds.
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Analyst Views on META
Wall Street analysts forecast META stock price to rise
44 Analyst Rating
37 Buy
6 Hold
1 Sell
Strong Buy
Current: 635.290
Low
655.15
Averages
824.71
High
1117
Current: 635.290
Low
655.15
Averages
824.71
High
1117
About META
Meta Platforms, Inc. is building human connections, powered by artificial intelligence and immersive technologies. The Company's products enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality (VR) and mixed reality (MR) headsets, augmented reality (AR), and wearables. It also helps people discover and learn about what is going on in the world around them, enabling people to share their experiences, ideas, photos, videos, and other content with audiences ranging from their closest family members and friends to the public at large. The Company's segments include Family of Apps (FoA) and Reality Labs (RL). FoA segment includes Facebook, Instagram, Messenger, WhatsApp and Threads. RL segment includes its virtual, augmented, and mixed reality related consumer hardware, software and content. Its product offerings in VR include its Meta Quest devices, as well as software and content available through the Meta Horizon Store.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Revenue Growth: In Q1 2026, Meta reported a 33% year-over-year revenue increase, primarily driven by rising ad impressions and prices, showcasing its strong performance in the advertising sector.
- Valuation Advantage: Trading at less than 20 times forward earnings, Meta is cheaper than the S&P 500's 21.8 times, highlighting its attractive valuation amidst rapid growth, appealing to value investors.
- AI Strategy: Meta aims to leverage AI technology in its products, with plans to launch a superintelligence platform, which, if successful, could significantly enhance its market position and drive future growth.
See More
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- E-commerce Momentum: Despite its massive scale, Amazon's e-commerce business continues to grow at double-digit rates, with the addition of 600 new brands and three-hour delivery services enhancing market share, reinforcing its position as the second-largest grocer in the U.S.
- Satellite Business Outlook: Amazon's broadband satellite business is set to launch soon, having already deployed 10 satellites and planning to deploy 20 more next year, with deals in place with Delta Airlines and Apple, highlighting its competitive potential in emerging markets.
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See More
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- Stock Performance: Meta Platforms' stock is currently down 20% from its all-time high in July 2025, indicating a lack of investor enthusiasm despite the broader market reaching new highs.
- Revenue Growth: In Q1 2026, Meta reported a 33% year-over-year revenue increase, primarily driven by rising ad impressions and prices, showcasing its strong performance in the advertising sector.
- Valuation Advantage: Trading at less than 20 times forward earnings, Meta is cheaper than the S&P 500's 21.8 times, highlighting its attractive valuation amidst rapid growth, appealing to value investors.
- AI Strategy: Meta aims to leverage AI technology in its products, with plans to launch a superintelligence platform, which, if successful, could significantly enhance its market position and drive future growth.
See More
Amazon's AI Business Expands Rapidly Amid E-Commerce Growth
- AI Business Surge: Amazon's AI segment saw a remarkable 40% quarter-over-quarter sales growth in Q1, positioning it to potentially achieve a $50 billion run rate, making it one of the largest chip companies globally and showcasing its technological prowess.
- Accelerated Cloud Growth: Amazon Web Services (AWS) experienced a 28% year-over-year sales increase in Q1, marking the highest growth in 15 quarters, indicating a rapid shift in enterprise demand for cloud services and solidifying Amazon's leadership in the cloud computing market.
- E-Commerce Market Share Growth: Despite its massive scale, Amazon's e-commerce business continues to grow at double-digit rates, now ranking as the second-largest grocer in the U.S. with three-hour delivery in 2,300 cities, enhancing its competitive edge and customer loyalty.
- Satellite Broadband Launch: Amazon's satellite broadband initiative, Amazon Leo, has successfully launched 10 satellites and plans to deploy 20 more next year, aiming to compete with SpaceX's Starlink, reflecting Amazon's strategic innovation and market expansion efforts.
See More
Earnings Reports and Tech Conferences This Week
- Earnings Reports: This week, Palo Alto Networks, CrowdStrike, and Broadcom are set to report earnings, with Palo Alto expected to post $0.80 per share on $2.94 billion in revenue, while CrowdStrike is projected to report $1.07 per share on $1.36 billion, highlighting strong market interest in cybersecurity.
- AI-Driven Market Rebound: As AI technology becomes more prevalent, both Palo Alto and CrowdStrike have seen their stock prices rebound to all-time highs, and despite facing high valuation pressures, market expectations for their future performance remain optimistic, making management's outlook a key focus for investors.
- Tech Conference Highlights: Nvidia, Arm, and Microsoft will discuss AI-related topics at tech conferences this week, with Nvidia CEO Jensen Huang scheduled to deliver a keynote on Monday, where he is expected to unveil a new product, potentially personal computers powered by its GPUs, further boosting its market share.
- Labor Market Data: The JOLTS report will be released this week, with expectations of 120,000 new private sector jobs added in May and an unemployment rate holding steady at 4.3%, reflecting economic resilience, and investors will closely monitor these figures for their potential impact on inflation and monetary policy.
See More
Amazon's Investment Opportunities and Market Outlook
- AI Opportunities: Amazon's expansion into artificial intelligence has positioned it favorably during the generative AI boom in 2022, with the Kiro tool seeing a tenfold increase in enterprise customer usage in Q1, showcasing its leadership in technological innovation.
- Cloud Growth: AWS achieved a 28% sales growth in Q1, the highest in 15 quarters, indicating that businesses are rapidly transitioning to cloud services, benefiting Amazon and further solidifying its market leadership.
- E-commerce Momentum: Despite its massive scale, Amazon's e-commerce business continues to grow at double-digit rates, with the addition of 600 new brands and three-hour delivery services enhancing market share, reinforcing its position as the second-largest grocer in the U.S.
- Satellite Business Outlook: Amazon's broadband satellite business is set to launch soon, having already deployed 10 satellites and planning to deploy 20 more next year, with deals in place with Delta Airlines and Apple, highlighting its competitive potential in emerging markets.
See More
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- Delayed IPO Timeline: SpaceX is targeting a public listing approximately 24 years after its founding, making it one of the latest entrants among recent IPOs, which underscores a growing reliance on private funding and may alter how future investors engage with new companies.
- Comparison with Peers: Unlike early public companies like Amazon, Apple, and Netflix that went public within 3 to 6 years of their founding, SpaceX's extended timeline could reshape investor expectations regarding the timing of new market entrants.
- Shifting Market Trends: The trend of companies like Palantir and Reddit, which waited 17 to 19 years before going public, highlights that IPOs are increasingly viewed as a means for early investors to cash out rather than a starting point for new ventures, as exemplified by SpaceX's anticipated listing.
- Investor Strategy Reevaluation: As IPOs evolve into cash-out opportunities for early investors and employees, investors may need to reassess their strategies to adapt to this market shift, particularly when seeking investment opportunities in emerging tech companies.
See More
Alphabet's TPUs Could Capture 20% of AI Infrastructure Market
- Market Share Forecast: Gil Luria from DA Davidson estimates that Alphabet's TPUs could capture 20% of the AI infrastructure market, which is projected to reach $900 billion, highlighting Alphabet's potential and strategic significance in the AI sector.
- Sales Model Shift: Alphabet plans to transition from historically renting TPUs through Google Cloud to directly selling them to select customers, a strategic change that will expand its addressable market and further drive cloud revenue growth.
- Competitive Landscape Analysis: While Alphabet's TPUs offer cost advantages, Nvidia still dominates with over 80% of the AI accelerator market share due to its robust software ecosystem and developer base, underscoring its leading position in the industry.
- Future Growth Expectations: Morgan Stanley anticipates that Alphabet's TPU sales will grow at an annual rate of 60% through 2028, reflecting strong market demand for its AI accelerators and indicating Alphabet's strategic positioning in the AI infrastructure space.
See More
