A Few Pennies’ Worth of Sense ‘Bout These Newfangled Machines

Now, I’ve seen a good many booms and busts in my time, and this here fuss over “Artificial Intelligence” strikes me as mighty similar. Folks gettin’ all worked up over machines thinkin’ for themselves, as if that ain’t been tried before. It’s a spectacle, I tell ya, a grand, expensive spectacle. The market, it seems, is demandin’ proof—real profits, not just promises—and that’s a sensible demand, if you ask me. Most of these companies are spendin’ money faster than a politician in an election year, and the market, bless its heart, is startin’ to notice.

There are two outfits, though, that have been tossed aside with the rest of the refuse, and I reckon they might just be worth a closer look. I speak of Microsoft (MSFT +0.28%) and Meta Platforms (META +0.47%). The market’s thrown ’em in the bargain bin, and that, my friends, is where the smart money often resides.

Microsoft

Microsoft, now there’s a company that’s been around the block a few times. They ain’t tryin’ to be the ones makin’ these thinkin’ machines, mind you. They’re sellin’ the shovels to the folks doin’ the diggin’. Smart business, that. They provide the tools—the cloud computin’ platform, Azure—for others to train and run these artificial brains. They even invest in OpenAI, but they ain’t puttin’ all their eggs in that one basket. A wise move, I say, like a farmer plantin’ a variety of crops.

They’re stayin’ neutral in this whole AI race, which is a position of strength, not weakness. And they’re doin’ quite well for themselves, with revenue risin’ a respectable 17% last quarter, and Azure growin’ an impressive 39% year over year. Yet, the stock trades at a price-to-earnings ratio you rarely see these days. It’s as if folks have forgotten how to count.

It’s a rare thing indeed to find Microsoft tradin’ for less than 25 times earnin’s, but there it is, plain as the nose on your face. Now’s the time to stock up, because deals like this don’t come around often. It’s like findin’ a gold nugget in a mud puddle.

Meta Platforms

Meta Platforms, formerly known as Facebook, is a curious beast. They own a whole passel of social media platforms—Facebook, Instagram, Threads, WhatsApp, and Messenger—that generate most of their revenue through advertisin’. But that ain’t what’s got folks talkin’. It’s their spendin’ on artificial intelligence.

Now, Meta’s been down this road before. They sunk a heap of money into the metaverse—a “virtual world,” they called it—and augmented and virtual reality headsets that didn’t quite catch on. A costly lesson, to be sure, but they seem to have learned from their mistakes. They’re applyin’ those lessons to their AI endeavors, and that could yield somethin’ worthwhile. Perhaps even a wearable that dominates the market. Though, whether that’ll happen is anyone’s guess. It could be years before we see a product that actually works.

Until then, investors will have to value the company based on what it might become. From that perspective, Meta’s stock trades at 21 times forward earnin’s. The S&P 500 (^GSPC 0.54%) trades for 21.9 times forward earnin’s, so Meta is actually cheaper than the market as a whole. That strikes me as a sensible risk-reward profile. You get the potential upside of an AI play with the stability of a strong advertisin’ company. Meta makes a good deal of sense right now, and looks like a fine companion to Microsoft in your portfolio.

2026-02-27 15:42

Microsoft

Meta Platforms

Read More