2 Artificial Intelligence (AI) Stocks That Are Cheaper Than You'd Expect

Key Points

• Both of these companies are well-established tech giants -- and AI is set to supercharge their growth.

• Those points make them bargains at their prices today.

• These 10 stocks could mint the next wave of millionaires ›

After leading market gains last year, artificial intelligence (AI) stocks are at it again. These high-growth stocks resumed their trek higher as investors became more optimistic that President Donald Trump's import tariffs won't represent as much of a headwind for companies as initially expected.

A few months ago, the idea of high tariffs prompted investors to worry about a halt in AI spending and greater costs for companies throughout industries. But, as the U.S. progressed on trade talks, investors grew more sanguine and focused on positive news such as companies reiterating plans for AI investment and speaking of how they will navigate a tariff environment -- and the situation seemed manageable. As a result, investors returned to growth stocks, including AI players.

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Now, as these stocks climb, you might expect them to trade at expensive levels. But I've got some good news for investors looking to get in on AI stocks or add to current positions: There still are bargains to be scooped up -- and some of these bargains are on market giants that already have proven their AI strengths. Let's check out two AI stocks that are cheaper than you would expect.

Image source: Getty Images.

1. Meta Platforms

Meta Platforms, (NASDAQ: META) as owner of Facebook, Messenger, Instagram, and WhatsApp, has built a social media empire. About 3.4 billion people use one of these social media apps on a daily basis. And this has helped Meta generate billions of dollars in revenue quarter after quarter. How does Meta do this? Through advertising. Companies aiming to reach us regarding their products and services advertise on Meta's apps to grab our attention.

But Meta isn't only about social media. This tech giant has broadened its focus to include AI research and development, with the company even creating its own large language model (LLM), Llama. Meta has made this development open source, allowing others to contribute to it, and this could set the company on the road to leadership in the field.

Now you might be wondering how Meta aims to monetize AI. To start with, Meta has launched a virtual assistant that's become the world's most used. This suggests people are spending more time on Meta's apps, and if this continues, advertisers may increase their spending here to reach their target audience. And Meta's AI is on track to help advertisers create more successful ad campaigns too.

AI expertise also may lead to more products and services that could broaden Meta's revenue opportunity. Meta recently launched Meta Superintelligence Labs, an effort to supercharge the company's work in AI.

All of this could generate major growth for Meta, especially considering the AI market is expected to reach into the trillions of dollars in a few years. And that's why, trading for 27x forward earnings estimates, Meta looks very reasonably priced right now.

2. Alphabet

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) already is winning in AI in two different ways. The company has developed its own LLM, Gemini, and has applied it to its principal revenue driver: Google Search, the world's most popular search engine. Gemini has helped Google Search deliver better results to users, and it's helped refine the ads and advertising experience of advertisers on the platform too. Like Meta, Alphabet generates most of its revenue through advertising -- in this case, across the Google platform.

These improvements in Google Search -- for users and advertisers -- should keep advertisers spending and even increasing their ad spend here.

Now here's the second way AI is benefiting Alphabet: The company, through Google Cloud, offers AI products and services to its customers, and this has fueled double-digit revenue growth. For example, in the most recent quarter, Google Cloud's revenue advanced 28% to more than $12 billion, and the company cited demand for generative AI and AI infrastructure.

So, Alphabet already is reaping the rewards of its AI investment, but revenue growth potential is far from over, considering that we're in the early chapters of the AI story.

You might expect Alphabet, in light of all of this and its long track record of earnings growth, to trade for a hefty valuation. But this stock actually is the cheapest of the Magnificent Seven tech stocks that led market gains last year -- it trades for only 19x forward earnings estimates. And at this price, it's a no-brainer AI player to buy and hold for the long term.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. 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 Alphabet and Meta Platforms. The Motley Fool has a disclosure policy.