With the market pulling back recently, some nice bargains in the technology space have been created. While under some near-term pressure, the tech sector has been one of the best places to invest over the past decade. In fact, many of the largest companies in the world come from the tech space or have a tech component.
Let's look at two leading tech companies to buy right now.
1. Alphabet
While Alphabet (GOOGL 0.41%) (GOOG 0.21%) is known for its Google search platform, the company is a whole lot more than just search. It is the largest digital advertising platform in the world, where it serves ads through its own sites and third-party sites. This includes not only Google but also YouTube, which is the most-watched video platform in the U.S.
NASDAQ: GOOGL
Key Data Points
In addition, the company operates the world's third-largest cloud computing operation in Google Cloud. This has been its fastest-growing unit due to artificial intelligence (AI) demand, as the business helps customers build their own AI applications.
Cloud revenue jumped 30% last quarter, but its operating income surged 142%. Cloud computing is a business with high fixed costs, and the unit has seen a profitability inflection point now that it has reached scale.
Alphabet has also created its own custom AI chip, Trillium, with the help of Broadcom. This chip, in combination with GPUs, has led to faster inference time and lower costs. This should give the company a cost advantage during the current AI infrastructure boon. It also has its own foundational AI model, Gemini 2.0, which developers can use to build their own AI applications.
The company is also using Gemini 2.0 within its own businesses for things such as improving its search results, its AI Overviews, and as a stand-alone app. It is also deployed in a number of its applications, including its received text-to-video platform Veo 2.
In addition to AI, Alphabet is at the forefront of two other leading technologies: quantum computing and autonomous driving.
Last year, the company made a major breakthrough in quantum computing with its Willow chip, which was able to solve a long-standing issue in the field by reducing errors as it scaled up.
Meanwhile, its Waymo unit is currently the only robotaxi company in the U.S. offering paid rides, and it operates in several cities.
Trading at a forward price-to-earnings ratio (P/E) of about 19 times 2025 analyst estimates, Alphabet is currently in the bargain bin and one of the cheapest mega-cap tech stocks tied to AI.
Image source: Getty Images.
2. Meta Platforms
Similar to Alphabet, Meta Platforms (META +0.22%) operates one of the largest digital advertising platforms in the world. However, instead of serving ads via search or a long-form video streaming service, the company connects advertisers to users of its portfolio of social media and messaging apps. Within its portfolio, it owns Facebook, Instagram, Threads, WhatsApp, and Facebook Messenger.
Meta has done a great job of attracting users to its platforms. At the end of last year, it had 3.35 billion people logged onto one of its apps on a daily basis.
Meanwhile, what the company has been able to do better than any other social media company is monetize its user base. This is reflected in the $14.25 in global average revenue per user (ARPU) it saw in Q4, which was exponentially higher than the $3.44 and $2.12 in global ARPU that rivals Snap and Pinterest generated during the same quarter, respectively.
Meanwhile, the company is still seeing strong growth by increasing its number of ad impressions and raising ad prices. Last quarter, ad impressions rose by 6% while the average price per ad climbed by 14%, leading to an overall 21% increase in ad revenue. These metrics reflect both the effectiveness of Meta's ads and the demand for them.
NASDAQ: META
Key Data Points
Meta is betting big on AI through its Llama AI model. The company says AI is helping lead to more time on its platforms, as well as helping to connect advertisers to their desired audiences.
The company also said its Llama 4 model, which is still being trained, will be multimodal and have agentic capabilities. It is looking to become the world's leading personalized AI assistant with Meta AI. In addition, Meta is investing in smart glasses and its virtual reality headset Quest, and continues to have high hopes for its virtual world, the metaverse.
Another big opportunity for the company is its newest social media platform, Threads. The platform reached 320 million monthly active users at year-end and has been adding about 1 million users a day. Meta has a strong history of building audiences and then later monetizing them, so when Threads reaches the monetization phase, it should become a nice growth driver.
Trading at a forward P/E of around 25.5 times 2025 analyst estimates, Meta is attractively valued given its growth and the opportunities in front of it.
