Two AI Stocks to Buy Now While Valuations Remain Attractive

The current bull market has entered its third year, and with the S&P 500 on track for double-digit annual returns, many investors wonder whether this momentum can persist. History suggests it can—past bull markets that have advanced this far have continued climbing. Yet the real opportunity may lie not just in riding this wave, but in identifying companies positioned to lead the next market surge. Among the technology sector’s biggest names, two AI stocks stand out as particularly compelling: they combine established market dominance with exposure to artificial intelligence, and remarkably, they trade at valuations that remain reasonable compared to peers.

The AI market is experiencing explosive growth. Currently valued at approximately $300 billion, industry analysts project it will expand to several trillion dollars by the early 2030s. This transformation presents a unique window for investors—the companies best positioned to capitalize on this shift could deliver substantial returns in both the current cycle and beyond.

Why AI Stocks Matter: Two Tech Giants Worth Your Attention

When examining which publicly traded firms offer the best combination of valuation and AI opportunity, Meta Platforms and Alphabet emerge as standouts. Both are industry leaders with proven business models, established revenue streams, and—crucially—significant financial resources to invest in artificial intelligence infrastructure. Unlike smaller companies betting their entire future on AI, these giants are diversifying into this technology from positions of strength.

Meta Platforms currently trades at approximately 26 times forward earnings estimates, down from 30x earlier in the year. This valuation presents what many analysts view as an attractive entry point. The company has committed substantial resources to its large language model, Llama, integrating it directly into its core profit driver: digital advertising. Since Meta operates Facebook and Instagram—platforms where billions of advertisers already compete for attention—improved AI-powered ad targeting could drive significant spending increases. The company’s track record of generating billions in annual earnings demonstrates its ability to monetize technological investments over the long term.

Alphabet trades even cheaper, at just 29 times forward earnings, making it another AI stock worth examining closely. Google Search remains the market’s dominant search platform, generating the vast majority of the company’s revenue through search advertising. Recently, Alphabet achieved its first-ever $100 billion quarterly earnings, a milestone underscoring the scale of its core business. Beyond search, the company has developed Google Cloud, which generates meaningful growth and serves enterprise customers with AI tools including Gemini, its proprietary large language model. As the AI market expands, Alphabet is already capturing revenue from these services and positioned to accelerate this growth stream.

Comparing the Investment Thesis: Why These AI Stocks Are Different

Both companies demonstrate why they merit consideration as potential leaders in the coming market advance. Meta and Alphabet differ from many AI-focused investments because they already generate enormous cash flows from established businesses. This financial strength provides a cushion while they deploy capital into artificial intelligence research and development. Their advertising-based revenue models also benefit directly from AI improvements—better algorithms and targeting capabilities translate into higher returns for advertisers, encouraging increased spending.

The historical precedent for betting on dominant tech players is instructive. When Motley Fool’s Stock Advisor team recommended Netflix on December 17, 2004, a $1,000 investment at that time would have grown to over $500,000 by late 2025. Similarly, Nvidia made their recommended list on April 15, 2005, and that same $1,000 would have appreciated to over $1.1 million. While past performance offers no guarantee of future results, these examples illustrate the potential returns available when investing in transformative technology companies at reasonable valuations.

The Case for Action: Positioning for the Next Bull Market

The valuation gap between these AI stocks and the broader market creates a potential opportunity. At 26-29 times forward earnings, Meta and Alphabet trade significantly cheaper than many of their Magnificent Seven peers, yet they possess comparable AI capabilities and superior cash generation. This combination—established profitability, AI investment, and attractive valuations—has historically preceded significant market outperformance.

Investors seeking exposure to the artificial intelligence wave without taking on the risk of unproven startups might find these two AI stocks particularly worth considering. Their size, profitability, and commitment to AI development position them to benefit substantially as the technology landscape evolves over the coming years. For those building a portfolio with a multi-year horizon, these companies merit serious evaluation.

Data and historical returns as of December 30, 2025. Motley Fool holds positions in both Alphabet and Meta Platforms.