The Nasdaq Composite recently entered a new bull market, and the index has returned 31% annually during bull markets since 1990.
Meta Platforms is using artificial intelligence to improve engagement and ad conversions across its social media properties, and the stock is currently 24% below its high.
Alphabet’s Google is a recognized leader in artificial intelligence infrastructure and large language models, which should drive market share gains in cloud computing.
The Nasdaq Composite(NASDAQINDEX: ^IXIC) recently entered a new bull market after crashing when President Trump began imposing tariffs earlier this year. Since 1990, the growth-focused index has been through six other bull markets, and it returned an average of 31% annually during those events.
That hints at substantial gains in 2026 and investors can lean into that possibility by buying shares of Meta Platforms(NASDAQ: META) and Alphabet(NASDAQ: GOOGL)(NASDAQ: GOOG). Wall Street is generally bullish on both stocks:
Among 73 analysts, Meta Platforms has a median target price of $850 per share. That implies 40% upside from its current share price of $604.
Among 76 analysts, Alphabet has a median target price of $330 per share. That implies 18% upside from the current share price of $278.
Here’s what investors should know.
Image source: Getty Images.
Meta Platforms owns 3 of the 4 most popular social media networks as measured by monthly active users. That affords the company insight into consumer preferences that lets it target media and advertising content. That advantage has made Meta the second largest ad tech company in the world, and it’s poised to gain market share, according to Morningstar.
Meta has been investing aggressively in artificial intelligence (AI), including custom chips, Llama large language models, machine learning models to recommend ad content, and AI creative tools for marketers. Those efforts are paying off. Users are spending more time on its social media properties, and ad conversion rates — meaning the number of clicks and purchases — are increasing.
Meta reported solid financial results in the third quarter. Revenue increased 26% to $51 billion and GAAP net income (excluding a one-time tax charge) increased 20% to $7.25 per diluted share. Nevertheless, the stock fell sharply following the report because Meta plans to spend even more aggressively on AI infrastructure next year.
Wall Street expects Meta’s earnings to increase at 15% annually over the next three years, a reasonable forecast given that Grand View Research estimates ad tech spending will grow at 14% annually through 2030. That makes the current valuation of 27 times earnings look reasonable. With the stock trading 24% below its high, now is a good time to buy.
Alphabet is the largest ad tech company in the world due to its ability to engage internet users and source consumer data through platforms like Google Search and YouTube. Generative artificial intelligence is changing the search landscape. Consultancy Gartner expects organic search traffic to drop at least 50% by 2028, and Alphabet is leaning into that trend with AI overviews and AI mode.
Alphabet also runs the third-largest public cloud in terms of infrastructure and platform services (CIPS). Google Cloud accounted for 13% of CIPS revenue during the third quarter, up a percentage point from the previous year. As a recognized leader in AI infrastructure and large language models, Google Cloud may continue gaining market share as demand for AI increases.
Alphabet reported encouraging third-quarter financial results, beating estimates on the top and bottom lines. Revenue increased 16% to $102 billion, an acceleration from 15% growth in the same period last year. GAAP earnings increased 35% to $2.87 per diluted share. On the earnings call, CFO Anat Ashkenazi cited strong demand for AI infrastructure, calling attention to custom chips and Gemini models.
As mentioned, ad tech spending is projected to increase at 14% annually through 2030. Grand View Research also expects cloud computing spend to grow at 20% annually over the same period. That means Alphabet should have no trouble achieving double-digit earnings growth for the foreseeable future.
Indeed, Wall Street estimates Alphabet’s earnings will increase at 15% annually over the next three years. That consensus makes the current valuation of 28 times earnings look reasonable. Investors should feel comfortable buying a small position in this stock today.
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Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Meta Platforms. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.
