Which Tech Giants Could Dominate the Next Big Tech Stock Rally? Two Are Ridiculously Undervalued Right Now

The AI Opportunity Is Still in Its Early Innings

The current bull market has delivered impressive returns, and as we enter its third year, market watchers are already speculating about what comes next. One clear trend: artificial intelligence continues reshaping the investment landscape. The AI industry is projected to expand from roughly $300 billion today to several trillion dollars within the next decade — a staggering growth trajectory that suggests today’s AI-focused companies could become the next big tech stocks to watch.

Here’s the fascinating part: even as AI-related stocks have climbed significantly, two heavyweight tech titans from the Magnificent Seven remain trading at valuations that still look attractive to value-conscious investors. These companies have the financial firepower, market dominance, and strategic positioning to potentially lead the market higher as AI becomes increasingly central to their business models.

Meta Platforms: The Social Giant Doubling Down on AI

Meta Platforms (NASDAQ: META) has become the most reasonably priced of the Magnificent Seven, currently trading at just 26x forward earnings — a marked improvement from the 30x valuation it commanded months earlier. At this level, the stock presents a compelling opportunity for long-term investors.

The company’s strategic pivot deserves attention. Meta has committed substantial resources to artificial intelligence development, particularly through its Llama large language model. Rather than treating AI as a peripheral technology, Meta is integrating it directly into its core profit engine: advertising.

This matters because Meta sits at the intersection of billions of users and advertisers seeking ROI. When advertising platforms use better AI tools to target and optimize campaigns, spending typically follows. The company’s unmatched user base across Facebook and Instagram positions it perfectly to capitalize on improved ad performance — a relationship that should translate into revenue acceleration.

Beyond revenue generation, Meta’s billions in annual earnings provide the financial cushion to fund ambitious AI initiatives while simultaneously returning capital to shareholders through dividends. The company’s historical return on invested capital demonstrates a proven ability to extract value from major technology bets, suggesting AI could be no different. This combination of valuation, business positioning, and financial strength makes Meta a potential driver of the next market cycle.

Alphabet: The Search King Expanding Into AI

Alphabet (NASDAQ: GOOG, GOOGL) shares several structural advantages with Meta, though its path to AI leadership looks somewhat different. Like Meta, Alphabet runs a highly profitable business with fortress-like competitive moats and trading at reasonable valuations — just 29x forward earnings.

The foundation here is Google Search, which generates the lion’s share of Alphabet’s revenue. The company recently achieved a historic milestone: its first-ever $100 billion quarterly revenue, largely driven by search advertising. Advertisers prioritize Google Search because it’s where billions of people go to find answers, making the platform uniquely valuable for reaching customers with intent.

Alphabet’s second major revenue stream, Google Cloud, is increasingly becoming a growth engine in its own right. The company offers customers a comprehensive suite of cloud services with particular emphasis on AI capabilities. Alphabet has developed Gemini, its own large language model, which it leverages internally and offers to cloud customers — positioning the company to benefit as enterprises increasingly adopt AI.

The current valuation discount is striking for a company with such a diversified and growing revenue base. As the AI market expands dramatically over the coming years, Alphabet’s established distribution advantages — through both search advertising and cloud — could amplify its AI exposure significantly.

Why These Could Be the Next Big Tech Stock Winners

What separates these two companies from less attractive opportunities is their combination of three factors: established market dominance, direct exposure to AI growth, and valuation that hasn’t fully captured that opportunity. Both Meta and Alphabet have proven business models generating billions in earnings, giving them the resources to invest aggressively in AI without sacrificing shareholder returns.

The S&P 500’s continued momentum suggests the current uptrend has room to run. But savvy investors often position for the next cycle before it becomes obvious. In that context, both companies offer the rare combination of being cheap today while positioned to lead tomorrow — a rare alignment that doesn’t persist indefinitely in public markets.