The Stock Market's Best-Kept Secret: Why These Magnificent Seven Giants Are Undervalued in the AI Bull Market

The current bull market has rewarded investors in AI stocks handsomely, yet a paradox remains: two of the market’s most powerful technology companies—powerhouses that are actively reshaping their businesses around artificial intelligence—continue to trade at valuations that defy their growth potential.

With the S&P 500 posting strong gains and entering its third consecutive year of upward momentum, history suggests this run has legs. But savvy investors know the real wealth lies not in chasing yesterday’s winners, but in identifying today’s undervalued players primed to dominate the next phase of market growth. The AI sector, expanding from roughly $300 billion today to an anticipated $2 trillion by the early next decade, offers precisely this opportunity—and two of the Magnificent Seven tech leaders are still pricing in yesterday’s narratives.

Meta Platforms: The Advertising Giant Rewiring Itself for AI

Meta Platforms (NASDAQ: META) stands as the cheapest member of the Magnificent Seven, trading at just 26x forward earnings estimates. Yet beneath this bargain valuation lies a company fundamentally reshaping its economic engine through artificial intelligence.

Meta’s all-in bet on AI isn’t theoretical. The company has developed Llama, a large language model now at the core of its competitive strategy. More importantly, Meta has weaponized this technology where it matters most: its advertising platform. This is where the stock market’s underappreciation becomes evident. With billions of users across Facebook and Instagram, Meta occupies the real estate advertisers covet. When AI-powered ad targeting and creative optimization deliver measurable ROI improvements, advertisers don’t hesitate—they increase spending. The mathematical connection between AI sophistication and revenue acceleration is nearly inevitable.

The financial fortress backing this transformation shouldn’t be overlooked. Meta’s multi-billion dollar earnings base provides the capital firepower to invest aggressively in AI infrastructure while simultaneously returning cash to shareholders through dividends. Historically, the company has demonstrated strong returns on invested capital across its major initiatives, a track record that suggests its AI investments could yield similar dividend-paying results over the long term.

Alphabet: Search Dominance Meets Cloud-Powered AI

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) mirrors Meta’s profile in several critical ways, yet operates from an even more entrenched market position. The company’s Google Search remains the undisputed market leader—a position so dominant that it recently powered Alphabet to a historic $100 billion single quarter.

But advertising represents only half the opportunity. Alphabet’s second major monetization path stems from Google Cloud, a rapidly expanding division offering enterprise customers everything from infrastructure to AI services. This dual-revenue model creates diversification while ensuring AI exposure across multiple growth vectors.

Alphabet’s homegrown large language model, Gemini, serves dual purposes: it enhances Google’s internal products and products services and gets offered to enterprise customers seeking AI capabilities. As organizations race to integrate generative AI into their operations, Alphabet sits positioned to capture demand across both the platform (search and advertising) and infrastructure (cloud services) layers.

Perhaps most striking: at just 29x forward earnings estimates, Alphabet trades at a comparable discount to Meta. For a company generating $100 billion quarters and operating in a market where AI adoption curves are still climbing steeply, this valuation compression presents a compelling entry point before the next market cycle fully recognizes these companies’ transformation potential.

The Bull Market Thesis

The stock market often prices in yesterday’s growth while ignoring tomorrow’s catalysts. Both Meta and Alphabet possess the financial strength, technological capabilities, and market positioning to be drivers—not followers—in the next bull market. Their current valuations suggest the market hasn’t yet reconciled their AI potential with their advertising dominance, creating the exact conditions that typically precede significant outperformance.