The market seldom provides great buying opportunities for some of the best companies on the planet. However, with the latest round of tech sell-offs, that's exactly where we find ourselves. Two of the most dominant stocks in the market over the past few years are on sale at historically cheap levels, and if you swoop in to buy shares now, you'll be set to make a massive return.
Two stocks that I'm eyeing are Nvidia (NVDA 1.24%) and Microsoft (MSFT 0.36%). Each of these stocks has reached relatively affordable levels, and now is the time to load up on shares.
Image source: Getty Images.
The last time the stocks were this cheap, they soared in the following months
The first part of this analysis is to select a valuation metric. In my opinion, the price-to-forward earnings ratio is the best measure, as it allows investors to value the company on where it's going rather than where it was. This is critical in a rapidly shifting artificial intelligence-powered landscape, as companies are spending billions of dollars on computing equipment to pursue AI as hard as they can.
Earnings a company produces over the past 12 months may be a more concrete way to value a business, but investors are doing themselves a disservice by not valuing the company based on forward earnings because that's what the rest of the market is doing. The market is a forward-looking machine, so that's the metric we should use.
From that standpoint, both Nvidia and Microsoft are valued at recently cheap levels.
MSFT PE Ratio (Forward) data by YCharts
Microsoft is now cheaper than it ever has been since 2023 -- even lower than the depths of the tariff sell-off in April 2025. Nvidia is in a similar boat, trading at levels not seen since April 2025 and the depths of the tech sell-off in 2023. Both of these times ended up being incredible buying opportunities for the stocks, and I think right now could also be just as good.
AI spending will push these two higher
Nvidia is a primary beneficiary of all of the AI spending that has been announced. Its graphics processing units (GPUs) are the primary computing units utilized in AI model training and inference. With each new data center that's built, Nvidia is likely to capture a huge sale. Furthermore, Nvidia is allowed to start exporting GPUs to China again, which could lead to a huge boost this year. Wall Street analysts project 65% growth in fiscal year (FY) 2027 (ending January 2027), showcasing that they expect another banner year for Nvidia.
NASDAQ: NVDA
Key Data Points
Microsoft isn't growing nearly as fast as Nvidia, and it's also spending a boatload of money on AI computing capacity. However, that's because the demand is there. Its cloud computing platform, Azure, is rapidly growing, rising 39% year over year in Q2 FY 2025 (ending Dec. 31). Cloud computing is how several AI companies are powering their workloads, as they don't have the capital necessary to build a data center themselves, so it makes more sense to rent it from a provider like Microsoft. This spending will help push Microsoft stock to new heights, but AI feature integration within Microsoft's core software suite is another source of growth.
NASDAQ: MSFT
Key Data Points
While the market growth may be somewhat fatigued by AI spending, the reality is that it's still going to happen. The recent sell-off in tech stocks is a gift to investors of all varieties, and you can get a one-two punch of high growth and resilience by purchasing shares of Nvidia and Microsoft right now. I can think of few better buys in the stock market than this duo, and investors who have missed out on the impressive runs these stocks have been on over the past few years can remedy that mistake by buying them today.
