The AI Opportunity Is Still Unfolding—And These Undervalued Tech Giants Could Benefit Most

The Bull Market Keeps Rolling, With AI as the Engine

The S&P 500 is on track for solid double-digit returns this year, and we’re now in the third year of this bull market run. Historical patterns suggest this momentum may have more runway ahead, since previous bull markets that reached this stage typically continued advancing. However, savvy investors know they should think beyond today’s headlines and position themselves for tomorrow’s opportunities.

The current bull market has been largely powered by artificial intelligence-related gains. But here’s what’s particularly interesting: analysts forecast the global AI market will expand dramatically—from roughly $300 billion today to several trillion dollars within the next decade. This explosive growth trajectory means the winners in AI won’t just dominate over the next year or two. They could potentially lead the next bull market as well.

The fascinating part? Some of the biggest tech players in the AI space are still trading at surprisingly reasonable valuations. Two major players, in particular, stand out as potentially transformative investments during the next market cycle.

Alphabet: Search Dominance Meets AI Innovation

Let’s start with Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL). This company sits at a unique crossroads: it commands an unmatched position in internet search (Google Search is by far the market leader), while simultaneously positioning itself as a major AI player.

On the traditional business side, Alphabet generates enormous profits through advertising. Marketers want access to Google’s massive user base, and that demand has been relentless. The company recently achieved a milestone by posting its first-ever $100 billion quarterly revenue figure. That’s a testament to how profitable its core search and advertising business remains.

But Alphabet isn’t resting on past success. The company has developed Gemini, its own large language model, which it deploys across its operations and offers to customers as a key product. Beyond search and ads, Google Cloud represents another major revenue stream, and it’s actively serving clients with AI-integrated solutions. This multi-pronged approach to AI adoption positions the company well to capture upside as AI becomes increasingly embedded in business operations.

What makes Alphabet particularly compelling right now is its valuation: at just 29x forward earnings estimates, it’s trading at levels that seem to undervalue the company’s growth potential and dominant market position. As the AI market expands, Alphabet’s numerous entry points into the technology—search enhancement, cloud services, advertising tools, and more—could drive substantial earnings growth.

Meta Platforms: Advertising’s AI Revolution

Meta Platforms (NASDAQ: META) presents a similar but distinct opportunity. Meta currently ranks as the most undervalued of the Magnificent Seven tech stocks, trading at roughly 26x forward earnings estimates—significantly lower than many of its mega-cap peers.

What’s driving this valuation disconnect? The market appears to be underappreciating Meta’s comprehensive AI transformation. The company has made a major commitment to artificial intelligence, developing Llama, its own large language model. More importantly, Meta is putting AI to practical use in its most valuable asset: its advertising platform.

Meta controls some of the world’s most-visited social platforms—Facebook and Instagram are where billions of people spend their time daily. Advertisers flock to these platforms precisely because they know their target audiences are there. Now, as Meta deploys advanced AI to optimize ad targeting and performance, advertisers should see better returns on their spending. When returns improve, advertisers typically increase their budgets, which directly translates to revenue expansion for Meta.

The company’s financial strength is another major advantage. With billions in annual earnings, Meta has the capital to invest aggressively in AI infrastructure while still returning value to shareholders through dividends. Historical data on Meta’s return on invested capital demonstrates the company’s ability to generate strong returns from its major investments, which suggests its AI pivot could follow a similarly profitable trajectory.

Why These Two Matter for the Next Bull Market

Both Alphabet and Meta share compelling characteristics: they’re proven, profitable businesses with entrenched competitive advantages, they’re both generating revenue from advertising and services where they dominate, and they’re both actively shaping the AI landscape rather than just responding to it.

More importantly, their current valuations don’t adequately reflect their potential participation in the multi-trillion-dollar AI opportunity ahead. In a bull market driven by AI growth, companies that combine established profitability with credible AI strategies and reasonable stock prices could emerge as market leaders once again.

The next chapter of this bull market may well be written by companies that have both the resources to lead in AI and the valuations that leave room for meaningful upside. Both Alphabet and Meta fit that profile remarkably well.