Better Artificial Intelligence Stock: Nvidia vs. Meta Platforms

Key Points

• Nvidia has become the go-to provider for chips to support AI, which has resulted in explosive sales and earnings growth for the tech giant.

• Meta is pouring billions of dollars into AI research and aims to be a leader in the field.

Artificial intelligence (AI) stocks have proven to be big winners for investors lately -- particularly last year, when some leading players in the space delivered double- and even triple-digit percentage gains. Though these high-growth companies' share prices tumbled earlier this year due to concerns about President Donald Trump's tariff plans, investors have recently returned to this compelling story.

Trump's trade talks and tentative agreements on the frameworks of deals with the U.K. and China have boosted optimism that his tariffs won't result in drastically higher costs for U.S. consumers or major earnings pressure on U.S. companies -- in contrast to the worst-case scenario that many had feared. As a result, investors feel more comfortable investing in companies that rely on a strong economic environment to thrive -- such as AI sector players.

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This means that many investors are once again asking themselves which AI players look like the best buys today. Nvidia (NASDAQ: NVDA) and Meta Platforms (NASDAQ: META) are both aiming to reshape the future with their aggressive AI plans. If you could only buy one, which would be the better AI bet now?

Image source: Getty Images.

The case for Nvidia

Nvidia already has scored many AI victories. The company has built an empire of hardware and services that make it the go-to provider for any organization creating an AI platform or program. But the crown jewels of its portfolio are its graphics processing units (GPUs). It offers the top-performing parallel processors, and thanks to both its ecosystem and manufacturing lead, they're also by far the best-sellers in their class. With demand from cloud infrastructure giants and other tech sector players still outstripping supply, Nvidia has been growing its sales at double- and triple-digit percentage rates, and setting new revenue records quarter after quarter.

In its fiscal 2025, which ended Jan. 26, Nvidia booked a 114% revenue gain to a record level of $130 billion. And the company isn't just growing its top line -- its net income surged by 145% to almost $73 billion as it continued to generate high levels of profitability on those sales.

Nvidia's clients today rely heavily on its hardware to power their projects, as its GPUs are some of the best chips available for the training of large language models (LLMs), as well as for inferencing -- the technical term for when those trained models are used to process real data to solve actual problems or make predictions. And Nvidia is helping customers with so much more -- from the design of AI agents to the powering of autonomous vehicle systems and drug-discovery platforms.

Nvidia also is innovating steadily to stay ahead of rivals. It recently shifted to an accelerated schedule that will have it releasing chips based on new and improved architectures every year; previously, it rolled out new architectures about once every two years. So this company is likely to keep playing a major role in the evolution of AI throughout its next chapters.

The case for Meta Platforms

You will know Meta best as an owner of social media apps, some of which you probably use every day -- its core "family of apps" includes Facebook, Messenger, WhatsApp, and Instagram. And the sales of advertising space across those platforms have provided billions of dollars in revenue and profits for the company.

But today, Meta's big focus is on AI. The company has built its own LLM, Llama, and made it open source so that anyone can contribute to its development. The open-source model can result in the faster creation of a better-quality product -- and in this case, it could help Meta emerge as a leader in the field. The company has put its money where its mouth is: It plans as much as $72 billion in capital spending this year to boost its AI presence. And just recently, Meta has been hiring up a storm in its efforts to staff its newly launched Meta Superintelligence Labs. That business unit will work on foundation models like Llama as well as other AI research projects.

In a memo to employees regarding the new AI unit, Meta CEO Mark Zuckerberg highlighted why it's well positioned to lead in AI development: "We have a strong business that supports building out significantly more compute than smaller labs. We have deeper experience building and growing products that reach billions of people," he said.

Those points are true, and they could help Meta reach its goals -- and deliver big wins to investors over time.

Which stock is the better buy?

From a valuation perspective, you might choose Meta, as the stock is cheaper in relation to forward earnings estimates than Nvidia -- a condition that has generally been the case.

NVDA PE Ratio (Forward) data by YCharts.

But a closer look shows that while Nvidia's valuation is down since the start of the year, Meta's actually has climbed.

NVDA PE Ratio (Forward) data by YCharts.

With that in mind, Nvidia looks like a more appealing buying opportunity, especially considering the company's ongoing strong growth and its involvement in every area of AI development and application in real-world situations. Meta also could emerge as a major AI winner down the road, and the stock is still reasonably priced today in spite of its gains in valuation. But Nvidia remains the key player in this space -- and at today's valuation, it's the better buy.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Nvidia. The Motley Fool has a disclosure policy.