Microsoft vs. Meta Platforms: What's the Better "Magnificent Seven" Stock to Buy for the Second Half of 2026?

It's been a challenging year for some of the world's leading tech stocks. While some stocks have thrived, namely those that are involved in selling memory and storage products, many others have struggled.

A couple of tech giants within the "Magnificent Seven" that have been doing particularly poorly are Microsoft (NASDAQ: MSFT) and Meta Platforms (NASDAQ: META). They're both down double digits as investors have been pivoting to other names in tech instead. But with both of these businesses still generating terrific results recently, they may still have a lot to offer investors. Which one is the better buy for the second half?

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The case for Microsoft

As of the end of June, Microsoft's stock was down an incredible 23%, making it the worst-performing stock in the Magnificent Seven. That's bad for current shareholders, but for people looking to buy the stock, it could make for an intriguing opportunity.

That's because Microsoft remains a top tech company. Its Windows operating system and Office software are staples in businesses all over the world. Artificial intelligence (AI) and chatbots aren't likely to make them obsolete. In fact, AI should enhance its products and make them more useful. But amid the panic due to AI fears, the market has dumped Microsoft along with many other software stocks.

The company's AI business grew at a rate of 123% in its most recent quarter, and the overall business generated 18% growth. Those are terrific numbers, with many of Microsoft's products and services delivering double-digit growth. For a top tech stock with a varied business model, Microsoft has a lot of upside given its attractive valuation; it trades at 23 times its trailing earnings, which is less than the S&P 500 average of 25.

The case for Meta Platforms

Social media giant Meta Platforms has been investing heavily in AI, but that hasn't been enough to stop it from going on a sizable downturn this year. At the halfway point of the year, it was down 15%.

Meta has many top social media applications in its portfolio, including Facebook and Instagram. And the company is looking to AI to drive even more opportunities for its business, with Meta AI now being available in its apps. The company has rolled out paid AI plans for its applications, which may drive more revenue growth for its already strong business. With 33% revenue growth during the first three months of the year, Meta is doing well as its apps continue to be attractive options for marketers and advertisers to reach their target markets.

The company's strong profits enable it to spend heavily on the metaverse and AI, potentially unlocking more growth in the long run. At a price-to-earnings multiple of 21, the stock is an even cheaper option than Microsoft.

Which stock looks better right now?

Although it's a bit more expensive, Microsoft's stock may generate better returns for investors in the long run. Its software is crucial for businesses, and that isn't likely to change anytime soon. AI may prove to be more of an opportunity than a threat to its operations. Meta, meanwhile, faces a bit more uncertainty given the increased spotlight on social media and the harms it poses to children. Its tendency to spend aggressively as it chases the latest trends (as is the case now with AI) is also why I'd tread a bit more cautiously with the stock.

Microsoft looks to be the safer, more reliable investment to consider when looking at the long run. It may just be a matter of when it starts to rally, but this is definitely a stock with a lot of potential upside given its reduced valuation.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Microsoft. The Motley Fool has a disclosure policy.