Two Next Big Tech Stocks to Watch: Undervalued AI Players That Could Power the Next Market Rally

The bull market has now entered its third year, and with the S&P 500 posting double-digit annual gains, investors are already looking ahead to what might propel the next big tech stock and broader market boom. While AI has been the star performer in the current cycle, analysts expect the artificial intelligence market to balloon from roughly $300 billion today to several trillion dollars within the coming decade—suggesting the next chapter of tech stock outperformance may be just beginning. The question isn’t whether AI will drive future returns, but rather which companies are still cheap enough to deliver exceptional gains. The answer may surprise you: two of the Magnificent Seven tech stocks remain fundamentally undervalued, making them prime candidates to lead the next bull market.

Meta Platforms: Turning AI Into an Advertising Powerhouse

Meta Platforms (NASDAQ: META) stands out as one of the cheapest plays among the Magnificent Seven, trading at just 26x forward earnings—down from 30x a few months prior. But the real story isn’t the valuation; it’s what the company is doing with artificial intelligence to amplify its existing strengths.

Meta has committed substantial resources to developing its own large language model called Llama, and the company is deploying this technology directly into its most profitable business: advertising. As the operator of Facebook and Instagram—two of the planet’s most trafficked social platforms—Meta already owns the destination where billions of advertisers want to reach consumers. If Llama-powered AI tools help advertisers achieve better campaign performance and higher ROI, they will inevitably spend more on the platform, driving substantial revenue expansion.

This isn’t speculation. Meta’s return on invested capital demonstrates the company’s historical ability to convert technology investments into shareholder returns. Coupled with its massive earnings base—which provides the financial firepower to bet on AI while simultaneously returning cash to shareholders through dividends—Meta possesses both the means and the strategic position to emerge as a next big tech stock winner in the AI era.

Alphabet: Leveraging Multiple Moats in Search, Cloud, and AI

Alphabet (NASDAQ: GOOG, GOOGL) presents a parallel opportunity, but with a different pathway to AI-driven growth. The company generates billions in annual earnings from its dominant position in search—Google Search maintains an unparalleled market share, ensuring a steady stream of advertiser demand. That foundation recently enabled Alphabet to report its first-ever $100 billion quarterly revenue.

Beyond search, Alphabet has built a second major profit engine: Google Cloud. This division serves enterprises with a comprehensive portfolio of products and services, many of which directly incorporate AI capabilities. The company has developed its own large language model, Gemini, which it uses internally while also licensing to external customers—creating an entirely new revenue opportunity.

Trading at just 29x forward earnings, Alphabet offers an attractive entry point for investors seeking exposure to multiple AI narratives. The company isn’t betting its future on a single technology or business line; instead, it’s integrating AI across search monetization, cloud services, and enterprise solutions. This diversified approach suggests that as the AI market expands, Alphabet will capture gains from multiple angles.

Why These Valuations Look Particularly Appealing

Both companies share a critical advantage: they have already-profitable, cash-generative core businesses that can fund extensive AI research and development without compromising shareholder returns. They aren’t startups racing to achieve profitability or speculative AI plays; they’re market leaders deploying cutting-edge technology to enhance incumbent business models.

The historical precedent is instructive. When Netflix appeared on Motley Fool Stock Advisor’s best-stocks list in December 2004, a $1,000 investment would have grown to over $507,000 today. When Nvidia made the list in April 2005, the same investment would have ballooned to more than $1.1 million. While past performance doesn’t guarantee future results, these cases underscore the extraordinary potential of early investments in transformative technologies. At current valuations, Meta and Alphabet may represent similar inflection points.

The Path Forward for AI-Era Investors

As the AI market explodes over the next decade, the next big tech stock winners are likely to emerge from companies that combine existing competitive advantages with serious AI capabilities. Meta and Alphabet fit this profile precisely: both operate in must-visit digital properties, both have commanding market shares in their respective domains, and both are trading at reasonable multiples relative to their earnings power and growth potential.

Investors seeking exposure to the artificial intelligence revolution should remember that timing and valuation matter. While many AI-related stocks have surged in price, these two next big tech stocks have remained relatively undervalued—offering a rare window to invest in category leaders before they potentially power the next bull market.