President Trump Buys 2 AI Stocks That Wall Street Says Are Undervalued

President Trump's investment accounts made over 6,200 stock trades year to date through May, according to financial disclosures filed with U.S. Office of Government Ethics. Those accounts are managed by third-party advisors, meaning Trump was not responsible for any decision, but it's still interesting to explore where his money is invested.

This year, Trump bought shares of Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG), with net purchases totaling $1.7 million to $3.6 million through May. He also increased his stake in Meta Platforms (NASDAQ: META), with net purchases totaling $845,000 to $4.8 million over the same period.

Alphabet and Meta Platforms sit at the center of the artificial intelligence infrastructure build-out, and most Wall Street analysts believe the stocks are undervalued. Here are the important details.

President Donald J. Trump speaks on the phone in the Oval Office. Image source: Official White House Photo by Joyce N. Boghosian.

Alphabet: 20% upside implied by Wall Street's median target price

Alphabet reported strong second-quarter financial results that beat estimates on the top and bottom lines. Revenue increased 24% to $119.7 billion, the sixth consecutive acceleration, driven by 82% sales growth in the cloud computing segment. Operating income (which excludes unrealized gains on its investment in SpaceX) increased 30% to $40.7 billion.

Alphabet shares have added 4% since the report, but the stock still looks very attractive at 18 times earnings. That is a massive discount to the five-year average of 24 times earnings, and the company has compelling growth prospects due to its full-stack approach to artificial intelligence (AI), which spans custom chips, cloud services, models, enterprise tools, and consumer applications.

On the earnings call, CEO Sundar Pichai highlighted momentum in each product category: Nearly 90% of Fortune 100 companies use Gemini Enterprise, a platform that helps businesses build AI agents and automate workflows. More than 9 million developers are building on the company's Gemini models each month. And Google Search engagement is trending higher due to AI Overviews and AI Mode.

Pichai also mentioned strong demand for custom AI chips called Tensor Processing Units (TPUs), the most popular alternative to Nvidia GPUs. Alphabet rents these chips to cloud computing customers, but it recently began selling TPUs directly to certain clients for use in external data centers. That shift positions Alphabet as a more direct competitor with Nvidia.

Wall Street estimates that Alphabet's earnings will increase at 14% annually over the next three years. That makes the current valuation of 17.9 times earnings look reasonable. In fact, most Wall Street analysts think the stock is undervalued. The median target price of $425 per share implies 20% upside from the current share price of $355.

Meta Platforms: 39% upside implied by Wall Street's median target price

Meta Platforms delivered mixed financial results in the second quarter, beating analysts' consensus estimate on the top line but missing on the bottom line. Revenue increased 28% to $60.8 billion, but operating margin dropped 12 percentage points, and net income fell 13% to $6.18 per diluted share.

A combination of legal fees, severance costs, and heavy spending on AI infrastructure crushed margins and reduced earnings. That caused the stock to drop 10%. But there are silver linings. The expenditures related to lawsuits and headcount reductions were one-time charges, and investments in AI infrastructure lay the foundation for strong future growth.

"We are now at a point where our investments in AI are accelerating every major part of our core business," CEO Mark Zuckerberg told analysts. "They're improving the experience for people using our apps, driving better performance for advertisers, and helping our teams build new experiences and ship faster."

Zuckerberg also shed light on how Meta will monetize AI products in the future. "We're developing new personal agents that will be the foundation of our next wave of products." He noted the recent launch of Meta Business Agent, which answers questions and automates employee workflows. Meta is also exploring renting out excess data center capacity directly to customers through a new cloud computing division.

Wall Street expects Meta's earnings to grow at 21% annually over the next three years. That makes the current valuation of 21 times earnings look cheap. Indeed, among 71 analysts, Meta has a median target price of $770 per share. That implies 39% upside from the current share price of $554.

Trevor Jennewine has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.