Nvidia and Meta Platforms Are Now Cheaper Than the S&P 500. Which "Magnificent Seven" Stock Is the Best Buy in March?
The long-term opportunity is even more appealing, as prominent innovations position Nvidia to go beyond the data center and be a leader in agentic artificial intelligence (AI) and physical AI (general robotics and self-driving cars). If Nvidia can diversify its customer base and reduce its dependence on data center revenue, it should be less prone to a cyclical pullback in hyperscaler spending.
The AI snowball
Meta is the best buy for investors looking for companies that are already capitalizing on their AI investments. Its business model is significantly different from other top hyperscalers (and key Nvidia customers) like Amazon, Microsoft, and Alphabet, which are investing in data center infrastructure to meet demand for cloud and AI services, even if it takes a sledgehammer to free cash flow (FCF).
The social media titan is one of the best examples of a company rapidly monetizing AI rather than building AI infrastructure and hoping customers see a return on their AI spending. AI is improving Meta's family of apps (Instagram, Facebook, Messenger, and WhatsApp) for users, creators, and advertisers.
Meta uses AI to connect users with content and ads that align with their interests. AI drives Meta's open-source Large Language Model Meta AI (Llama) -- which powers Meta AI assistants. Meta's Reality Labs division, which includes augmented and virtual reality products and metaverse projects, is also investing in AI-powered hardware.
Perhaps Meta's greatest advantage is that it can afford to aggressively spend because the family of apps is so profitable. In many ways, Meta is an AI snowball. AI investments improve the family of apps business, accelerating high-margin growth and boosting FCF, which can be used on projects that may take several years to turn profitable or fail entirely.
All told, Nvidia and Meta are high-conviction buys for investors who believe the potential rewards of these companies far outweigh the discussed risks. The cheaper both stocks become, the more risk is being taken off the table for long-term investors.
Should you buy stock in Nvidia right now?
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Daniel Foelber has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool has a disclosure policy.
Nvidia and Meta Platforms Are Now Cheaper Than the S&P 500. Which "Magnificent Seven" Stock Is the Best Buy in March? was originally published by The Motley Fool
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