Meta Platforms is the cheapest Magnificent Seven stock as AI investments unfold

After three years of roaring higher, artificial intelligence (AI) stocks have reached an inflection point. Investors have been slower to jump into the AI story in recent times due to headwinds such as concerns about the strength of AI driven revenue ahead and worries about the war in Iran. Thus many stocks that led the S&P 500 higher in recent years, such as the Magnificent Seven tech stocks, did the opposite early this year and led the index lower. Although these players have been rebounding this month, it is still too early to say whether the volatility seen over the past few months is truly over. Meanwhile, many of these stocks remain at attractive valuations even after the rebound. With this in mind, is the following bargain Magnificent Seven stock a buy in today market? One metric answers the question... The cheapest Magnificent Seven stock This particular Magnificent Seven company is one you probably know well because you might be one of the 3.5 billion people worldwide who use at least one of its social media apps daily. I am talking about Meta Platforms (META), the owner of Facebook, Messenger, Instagram, and WhatsApp. The stock, trading at 21x forward earnings estimates, is the cheapest of the Magnificent Seven stocks today. Meta makes most of its revenue from advertising, with companies paying to reach users across these apps. They know we spend a lot of time on them, so it is an ideal place to connect with us. This has translated into billions of dollars in earnings for Meta over time. But Meta has not stopped there, and in recent years it has put a major focus on AI. The company aims to be a leader in this area and has already taken steps to make that happen. Meta has built its own data centers, developed its own large language model, and created a superintelligence lab. As part of this, the company recruited AI experts last year, including Alexandr Wang, co founder of Scale AI. Wang led the development of Meta's first big AI model, Muse Spark — the company unveiled the model earlier this month. Meta Platforms Today's Change (1.81%) $12.27 Current Price $689.14 Key Data Points Market Cap $1.7T Day's Range $675.14 - $691.52 52wk Range $479.80 - $796.25 Volume 1.2M Avg Vol 16M Gross Margin 82.00% Dividend Yield 0.30% Monetizing the AI investment Meta aims to benefit from this push in a variety of ways. For example, using AI in advertising could improve ad performance, prompting advertisers to spend more on Meta. The company also said it plans to offer third-party developers paid access to Muse Spark technology in the future. These are just a couple of ways Meta could monetize its investment. All of this sounds great, but is buying Meta really a good idea in today's market? After all, the company, which has poured billions of dollars into AI, isn't immediately delivering enormous revenue growth from this investment. It's important to note that this is normal for Meta, and the company has been through this before — chief executive officer Mark Zuckerberg spoke about it during a 2024 earnings call. "We've historically seen a lot of volatility in our stock during this phase of our product playbook — where we're investing in scaling a new product but aren't yet monetizing it." He said that he expects this to be the case with AI, too, and that the technology involves a multi-year investment cycle. The company's stock performance over time Now here's the good news. If we look at Meta's return on invested capital (ROIC) over time in relation to stock performance, we can see that during troughs in ROIC, Meta's stock has slipped — but every time ROIC has climbed, the stock too has advanced. So history shows us that Meta has made wise investing decisions over time as the company has benefited from them. It also shows us that investors have taken notice because the stock has increased along with or following periods of ROIC growth. This one metric — ROIC — suggests that now, as Meta invests in its next growth driver, actually is a fantastic time to get in on the stock. And the S&P 500's gains over time show that tough market environments are always temporary, meaning quality stocks like Meta won't remain in the doldrums forever. All of this makes this bargain Magnificent Seven stock one to buy — and hold onto as it benefits from its big AI investment in the years to come.