There are a handful of artificial intelligence (AI) stocks that trade for ridiculously high prices that should be avoided. Likewise, there are several that are trading for bargain valuations, and those are the ones investors must pinpoint to maximize returns. Two that I think are at the top of the bargain list are Microsoft and Meta Platforms. Both of these stocks have been ignored by the market in 2026, and could make a huge comeback in the second half of the year. This makes them strong candidates to buy now, as the returns could be explosive if they can get back to all-time highs. Microsoft and Meta Platforms are currently down, but definitely not out.
Microsoft
Microsoft is widely recognized as a leader in artificial intelligence, heavily investing in the field through strategic partnerships and product integration. It maintains a close relationship with OpenAI, the creator of ChatGPT, and has successfully woven several of OpenAI's advanced AI capabilities into its own Copilot platform. This integration has been a significant growth driver, with Copilot's annual recurring revenue surging by an impressive 123% year over year to reach $37 billion. Furthermore, Microsoft's cloud computing division, Azure, stands as the second-largest platform globally and is experiencing robust growth at a 40% pace, largely fueled by the escalating demand for AI-related computing resources. Despite this strong underlying business performance, marked by an 18% increase in overall revenue and a 23% rise in diluted earnings per share during its most recent fiscal quarter, Microsoft's stock has seen an unusual decline, trading more than 30% below its all-time high. This makes its current valuation particularly attractive. For investors considering its future potential, evaluating the stock based on earnings projections for fiscal year 2027 (which began July 1) reveals a compelling picture. At approximately 19 times forward earnings estimates, Microsoft stock is trading at its most affordable valuation in the past three years. This combination of strong AI leadership, consistent financial growth, and a depressed stock price positions Microsoft as a highly compelling investment opportunity that is unlikely to remain undervalued for an extended period.
Meta Platforms
Meta Platforms finds itself in a unique and somewhat complex market position compared to Microsoft. On the surface, the company's performance is notably strong. The majority of Meta's substantial revenue is generated from advertising across its vast ecosystem of social media platforms, which includes popular services like Facebook, Instagram, Threads, and WhatsApp. Critically, Meta has strategically integrated various AI tools into these products, a move that has demonstrably contributed to its robust financial results, including a significant 33% year-over-year revenue increase during the first quarter. However, investor sentiment remains cautious. A primary concern for the market is Meta's aggressive and substantial spending on developing and deploying AI infrastructure. The current perception is that the returns generated through improved advertising performance, while positive, have not yet fully justified the immense capital outlays. Investors are eagerly awaiting the emergence of new, direct revenue-producing AI products or services that can clearly demonstrate a return on this significant investment. Consequently, despite its strong core advertising business and growth, Meta's stock is currently trading at a relatively low valuation of about 17.5 times forward earnings estimates. This presents a dual-sided opportunity for investors. If Meta's extensive AI investments ultimately translate into successful new products or enhanced revenue streams beyond just advertising optimization, the stock could see an explosive rebound from its current position, nearly 30% below its all-time high. Even in a scenario where its more ambitious AI ventures don't fully materialize as new revenue streams, Meta still possesses a highly lucrative and resilient advertising business that outperforms many other major technology companies. Therefore, its current valuation offers a substantial upside potential for investors willing to bet on the eventual payoff of its AI strategy, or simply on the strength of its core business.
