If you're looking for market-leading artificial intelligence (AI) stocks that are trading down in 2026 for no good reason, look no further than Amazon (AMZN +3.23%) and Meta Platforms (META +2.27%). Both stocks are down about 10% year to date as of this writing, largely because investors have grown concerned about the amounts they are spending on AI. However, this does not take away from the fact that they are achieving strong growth while trading at attractive valuations.
Both stocks have also won over a former long-term bear in Wells Fargo chief equity strategist Ohsung Kwon. The analyst disliked the huge capital expenditures that hyperscalers had been incurring to build out their massive data centers. However, in an interview Monday on CNBC, Kwon said he now thinks free cash flow for these companies may come in above analysts' consensus expectations, and that they are set to see strong revenue growth. He added that if AI is as transformative a technology as predicted, then these companies are not overinvesting in the infrastructure to support it.
At their current prices, Kwon sees hyperscalers as more attractive options. Let's take a closer look at why both Amazon and Meta look like buys.
Amazon
NASDAQ: AMZN
Key Data Points
The bullish thesis on Amazon is quite simple. Yes, the company is spending massively to build out its AI data center capacity, but this company has time and again spent aggressively to grow its business, whether with e-commerce or cloud computing. And each time it has gone down such a path, it has resulted in it becoming a bigger and better company.
The demand for infrastructure-as-a-service for AI remains robust, and Amazon's partnerships with Anthropic and OpenAI help ensure that demand for its services will remain strong. Expect this spending to lead to accelerating growth at Amazon Web Services (AWS). At the same time, the company is using AI and robots to make its logistics and e-commerce operations more efficient. This is helping its e-commerce operating profits grow much faster than its revenue, which is still solid.
Given its opportunities, the stock is attractively valued at a forward P/E of below 27 and a forward 1-year P/E of only 22 based on 2027 estimates.
Image source: Getty Images.
Meta Platforms
NASDAQ: META
Key Data Points
The implementation of AI has created a huge flywheel effect for Meta's social media advertising business. The use of AI is improving its content recommendation engine, which is helping attract more users and keep them active on its apps longer.
At the same time, the company is offering its advertising customers AI-powered tools to help them improve their entire marketing process, leading to better customer conversions. This is both driving more ad impressions and allowing Meta to charge more for ad space. The better its AI gets at this, the more revenue it drives. Few companies have shown the ability to take AI and fuel growth the way Meta has.
Best of all, this AI stock is cheap, trading at a forward P/E of below 20 and a forward 1-year P/E of about 16.5 based on 2027 estimates.
