When it comes to the ongoing artificial intelligence (AI) secular trend, Alphabet (GOOGL 1.45%) (GOOG 1.47%) and Meta Platforms (META 2.48%) are probably two companies that investors think about. Both internet giants have their merits.
But which of these AI stocks will make you richer?
Image source: Alphabet.
Betting on both stocks might be the best move
NASDAQ: GOOGL
Key Data Points
Analysts expect Alphabet and Meta to grow their revenues by 14.4% and 21.3%, respectively, year over year in 2025. Alphabet's Q3 operating margin was 31%, while Meta's was even better at 40%. It's hard to argue with the belief that owning both stocks might be the best move.
It helps their competitive positions that Alphabet and Meta have billions of users accessing their various platforms. Besides the massive advantage that being able to collect and leverage data provides, they possess powerful network effects. This means there is a very low probability that they will get disrupted anytime soon.
What's more, Alphabet and Meta are spending huge sums on AI-related capital expenditures in an effort to better serve their users and ad customers.
NASDAQ: META
Key Data Points
Take advantage of compelling valuations
Both Alphabet and Meta have crushed the S&P 500 in the past five years (as of Jan. 20). However, they don't trade at expensive valuations today.
Investors can buy the Google parent at a forward price-to-earnings (P/E) ratio of 29.5. The social media juggernaut's stock, on the other hand, goes for a cheaper forward P/E multiple of 20.8.
Over the next five years, these two companies have what it takes to be wonderful portfolio additions.
