The recent fortunes of the " Magnificent Seven " couldn't be more different. The once seemingly unstoppable electric vehicle pioneer Tesla just reported an abysmal second quarter that saw its net income drop by more than half from a year ago while Nvidia seems incapable of slowing down, growing last quarter's net income by more than 600%.
Driving Nvidia's explosive growth is its position at the center of the artificial intelligence (AI) boom that's lifting the tide for all boats in tech, at least those without slipping EV sales. Microsoft, Alphabet, and Apple have all benefited, seeing their stock prices appreciate significantly.
While it also saw a big bump in share price, up 34% this year, Meta Platforms (NASDAQ: META) hasn't been quite as front and center in the AI hype cycle as some of the other big tech players. I think that's changing. Here are a few reasons why it's one of my favorite stocks in technology today.
1. Meta is investing heavily in AI; it looks like it's going to pay off
Meta's CEO, Mark Zuckerberg, has caught a lot of flak for his big bet on virtual reality (VR). The company is spending billions on developing its "metaverse" technology, imagining a future where people spend their time in an immersive, digital world.
The plan hasn't exactly panned out, and there's certainly a chance it never will. So why am I talking about VR? Well, for one, Meta plans on integrating its VR tech with AI, but the larger point is that Zuckerberg isn't afraid to make big bets on the future and to spend enormous amounts of money making it a reality. Oh, and Meta has enormous amounts of capital to spend. Take a look at this chart showing the company's recent capital expenditures (capex) and free cash flow (FCF) . 
META Free Cash Flow data by YCharts
Notice the massive upswing in FCF? Meta has a lot of cash to play with, and it plans on using it. The company recently raised its expected capex in 2024 to $35 billion-$40 billion as it "invest[s] aggressively to support [its] ambitious AI research and product development efforts."
These efforts will improve upon the company's flagship AI product, Meta AI, already released to the public and integrated into its products like Facebook and Instagram. Now, pouring money into development doesn't always pan out -- and it's important to consider what could happen here -- but when it does, the payoff can be huge.
2. Meta's products are as popular as ever, and its ad business is booming
Looking to expand the horizons of a business is important, but not at the expense of your core business. Luckily, Meta isn't at risk of doing that anytime soon. Maybe Facebook at this point seems passe; maybe it seems like only your grandmother and her friends use it, but it is still the most popular social media platform in the world with a very active user base. Meta owns the first-, third-, fourth-, and seventh-most popular social media platforms in the world.
According to the company, 3.24 billion people use one or more of its platforms daily. It's not slowing down, either; that number grew by 7% last quarter from the year-ago period.
This breadth and depth of engagement make Meta ad space valuable -- a good thing, because ad revenue makes up 99% of the company's bottom line. Last quarter saw the company's total revenue spike 27% year over year, driven primarily by a 20% jump in ad impressions -- industry jargon for ads seen on a screen -- and a 6% jump in the price of ads.
3. Meta's stock looks pretty cheap at the moment
Meta is currently trading at a price-to-earnings ratio (P/E) of 28 and a forward P/E of just 23 -- that's pretty low for a tech company. Take a look at its forward P/E vs some peers'.
META PE Ratio (Forward) data by YCharts
I think this presents a great buying opportunity. So much of the hype has focused on other players in big tech, but Meta looks to be doing all the right things, and its stock price has yet to catch up.
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. Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy .
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