Being a Microsoft (NASDAQ: MSFT) and Meta Platforms (NASDAQ: META) investor in 2026 has been pretty disappointing. The stocks are both negative for the year, with Meta down nearly 10% while Microsoft is down over 20%. With these two widely being considered two of the major AI hyperscalers, it’s surprising to see their stocks down so much, but the market hasn’t bought what these two are selling.
All of that could change in the next few days as they report final results, but in the meantime, I think there’s a clear winner to load up on.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
Why are these two down so much?
Meta Platforms’ demise has ultimately been in its own hands. The market is worried that Meta’s AI spending could be a repeat of its metaverse debacle, in which it spent billions on developing a metaverse that never panned out and was eventually shut down. Meta is spending hundreds of billions on AI data centers and using all of this AI computing capacity for internal uses, but doesn’t really have a groundbreaking model to show for it. While its Llama model is used heavily on its social media platforms, it hasn’t found a ton of use in the AI community at large, making it seem like a flop. Furthermore, Meta isn’t charging for it, so there doesn’t appear to be a payoff for investors, either.
Meta is focused on building a superintelligence model that could be paired with some of its AI glasses to see and interact with the world around it. This is its major bet, and if it pans out, it could pay off, but if it doesn’t, hundreds of billions of dollars would have been spent for nothing. Meta’s strategy doesn’t convince the market of its worth, so the stock is down.
The bear case for Microsoft is a lot less clear. Microsoft’s AI strategy is actually panning out, with its AI annual revenue run rate passing $37 billion during its last quarter, up 123% year over year. This includes products like Copilot, which has become a top tool for businesses to use. Microsoft also has a thriving cloud computing segment, with revenue soaring 40% year over year. Microsoft is checking all of the boxes it should be to be a successful investment in the AI world, yet the market has chosen to sell it off.
These two now trade for similar valuations, with Meta being slightly cheaper.
