Key Points
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Massive AI spending for this social media and AI giant has given investors pause.
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Rising competition and a botched product launch have weighed on this digital ad company.
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This AI infrastructure company still has a massive backlog, no matter what happens to a key client.
In the market, some investors have become hesitant to buy, and that reluctance is understandable. The Shiller cyclically adjusted price-to-earnings (CAPE) ratio is near record highs at 42, and the frothiness of some artificial intelligence (AI) stocks has investors fearing a pullback.
Nonetheless, investors need to remember that they can still find bargains related to AI, and indeed, the value propositions in some stocks appear to have been underappreciated. Hence, even if one also remains focused on building liquidity, it might be worthwhile to add positions in three specific tech stocks. Here’s why.
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1. Meta Platforms
Facebook parent Meta Platforms (NASDAQ: META) is in the midst of a transition. Over 99% of the company’s revenue comes from digital advertising. However, the 3.56 billion people who log on to one of its platforms daily make up a large share of the world’s population. With that, Meta plans to build its future on a more aggressive pivot into AI.
The company intends to leverage its massive data hoard to train AI models. This could succeed as Meta likely has personal data that its peers do not. Additionally, it has linked its long-term metaverse strategy to AI and, with a massive investment in infrastructure, has also laid the groundwork to become a neocloud company.
To achieve that, it plans to spend between $115 billion and $135 billion on capital expenditures (capex) in 2026 alone. Still, given its $81 billion in liquidity and nearly $46 billion in free cash flow over the trailing 12 months, it can afford to compete.
Furthermore, its P/E ratio has fallen to 21, well below the S&P 500 average of 32. Given its low valuation and market position, Meta Platforms offers new investors an attractive value proposition.
2. The Trade Desk
Admittedly, The Trade Desk (NASDAQ:TTD) stock looks like an AI stock that failed to meet investor expectations. Revenue growth has decelerated as competition from Meta, Alphabetand Amazon led investors to question whether the demand-side digital ad company could continue to compete in its industry.
Also, the transition from Solimar to the AI-driven Kokai platform faced resistance from customers. Users saw it as a less transparent platform, making ad campaign adjustments that they did not understand.
Consequently, revenue growth, which was once routinely above 20% annually, fell to just 12% in the first quarter of 2026, and analysts forecast only a 10% increase for all of 2026.
Nonetheless, even though investors dislike slowing growth, its revenue continues to increase. Despite the competition, its customer retention remains above 95%. That streak has lasted for more than a decade and indicates that its demand-side platform still has a place in the digital ad industry.
Furthermore, its P/E ratio has fallen to 22. That is far below last summer, when the earnings multiple briefly shot above 100, and appears to put The Trade Desk in value-stock territory. Although investors should not expect a quick recovery, the current growth alone should help the stock begin a turnaround.
3. Oracle
Oracle (NYSE: ORCL) has diversified away from being a software and database management giant into more of an AI infrastructure play. Amid successes in that field, the stock surged to record highs last year when a deal with OpenAI increased its backlog by $300 billion.
However, investors began to sour on Oracle as doubts emerged that OpenAI was in a strong enough financial condition to meet the terms of the deal. Despite the $638 billion backlog growing significantly since the announcement, Oracle’s stock has lost nearly half of its value since the OpenAI announcement.
Indeed, the company’s total debt has reached $130 billion, and with the company spending $56 billion on capex in fiscal 2026 alone, those cash outlays understandably make investors nervous.
Still, even if OpenAI were to disappear tomorrow (a highly unlikely scenario), Oracle would presumably still have up to a $330 billion backlog, which would still justify its investments in more infrastructure. Moreover, the cloud segment, which is now Oracle’s largest revenue driver, increased by 47% in the fourth quarter of fiscal 2026 (ended May 31).
Finally, the pullback in its stock price has taken its P/E ratio to 24, its lowest earnings multiple since 2022. Ultimately, no matter what happens with the economy, that level should limit the downside in the stock, making now a good time to add shares.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
