Seven tech companies roared into the spotlight over the past three years, wowing investors with their earnings and stock performance. In fact, these stocks, referred to as the Magnificent Seven, played a major role in the S&P 500's gain over that time period. They helped power the famous benchmark to a 78% increase from 2023 through 2025.
These companies each have well-established tech-related businesses, have delivered growth over time, and are leaders in their markets. But they also have something else that investors were looking for: involvement in the high-potential field of artificial intelligence (AI). AI may revamp the way the world operates, increasing efficiency and innovation, and this could generate spectacular growth for companies developing or using the technology.
So, you may expect these stocks to come with a hefty price tag. But, in recent times, a pullback in tech stocks has lowered valuations, and many quality stocks are trading at bargain levels. In fact, you may be surprised to learn which AI stock is the second cheapest of the Magnificent Seven...
Image source: Getty Images.
Advancing in AI
First, let's start by taking a look at the names in this group. They are: Apple, Amazon, Alphabet, Meta Platforms, Microsoft, Nvidia (NVDA 1.24%), and Tesla, leaders in areas from cloud computing to social media and electric vehicles. And each of these companies has advanced in the area of AI over the past few years.
As mentioned, recent declines in tech stocks pulled valuations down, leaving one of these stocks at a particularly low level -- its lowest in nearly a year. And it is the second cheapest of the Magnificent Seven. The stock I'm talking about is Nvidia. As the chart below shows, Nvidia and Meta both trade for about 22x forward earnings estimates.
AMZN PE Ratio (Forward) data by YCharts
This valuation may surprise you because Nvidia is the key player in the AI revolution and has been the stock that investors have flocked to quarter after quarter. On top of this, Nvidia delivered yet another blowout earnings report last month: The company announced a 65% increase in full-year revenue to $215 billion, a record level, and this was driven by ongoing demand for its chips and related products.
Nvidia makes graphics processing units (GPUs), the chips that power major AI tasks like the training of models or the inference process that helps them do their problem-solving jobs. Of course, other companies make GPUs, but Nvidia's are known as the fastest around -- and that's kept customers with strong AI ambitions coming back.
NASDAQ: NVDA
Key Data Points
Why has this stock become so cheap?
So, why has Nvidia stock become so cheap? Declines came as part of a general movement among AI stocks, as various concerns weighed on the minds of investors. Some worried that the AI revenue opportunity would fall short of expectations and that companies were investing too much in the technology, for example. And part of the drop may have been a movement among some investors to lock in gains after increases in the double- and triple-digits in recent years.
The good news is the pullback wasn't linked to any negative news regarding AI demand. The message has been unanimous: Companies from chip designers to cloud service providers, in recent quarterly and full-year reports, said AI customers have flocked to them for products and services. And Nvidia spoke about the growing momentum in agentic AI, or AI-driven systems that can reason and solve complex problems.
All of this suggests that the AI boom continues to march on and hasn't lost momentum -- and that means right now may be an important moment for investors. Today, the savvy investor has the opportunity to get in on a variety of top AI stocks for very reasonable prices. And investors may want to start with Nvidia, the leading AI player that could become the biggest winner of the AI story over the long run.
