NVIDIA(NASDAQ: NVDA), Alphabet, Apple, microsoft, Amazon, Metaplatforms(NASDAQ: META)and tesla – known collectively as the “Magnificent Seven” – have produced monstrous returns for long-term investors. But all seven stocks have lost value so far in 2026, and that should warrant some attention from bargain-hunting investors.
Nvidia and Meta Platforms, in particular, have compelling valuations based on one key metric. Here’s why both growth stocks are selling off and some context to help you decide which might be the best buy for you in March.
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The price-to-earnings (P/E) ratio is one of the most popular metrics for evaluating stocks. And for good reason, since it’s simply share price divided by earnings per share.
Companies with clear ways to deploy capital effectively deserve premium valuations. a company like Coca-cola can expand into new markets and acquire or develop new beverage lines. But it doesn’t have as many levers to pull to accelerate earnings growth compared to a company like Amazon, which operates in so many different end markets.
The forward price-to-earnings ratio rewards companies by dividing the stock price by analysts’ consensus earnings estimates for the coming year. For example, Nvidia has a P/E of 37.2 compared to 29.6 for S&P 500but only a Forward P/E of 22.1 compared to 23.6 for the S&P 500. Similarly, Meta Platforms is also slightly cheaper than the S&P 500 based on forward earnings.
S&P 500 P/E Ratio Future Estimate Data by YCharts
Of course, the forward P/E can inflate the value of a stock if a company doesn’t make profits. And investors who buy stocks and plan to hold them for the long term probably care more about a company’s earnings over several years, if not decades, than they do today.
Nvidia is by far the best stock of the Magnificent Seven for investors who believe the company can sustain earnings growth even close to its current rate. For its fiscal 2026 year, which was the 12 months ending January 25, 2026, the company grew revenue by 65% ​​and diluted earnings per share by 59.5%. Nvidia’s valuation remains reasonable, even though its share price has skyrocketed, because the company has grown its earnings rapidly.
However, just a handful of cloud providers and hyperscalers generate just over half of Nvidia’s data center revenue, accounting for just under 90% of its sales. If one or two key customers reduce their spending, Nvidia’s growth rate will fall. But given its volatility, Nvidia would still be a bargain at current levels if it could grow its earnings, say, 20% to 30% per year.
The long-term opportunity is even more attractive, as notable innovations position Nvidia to go beyond the data center and be a leader in agent artificial intelligence (AI) and physical AI (general robotics and autonomous vehicles). If Nvidia can diversify its customer base and reduce its reliance on data center revenue, it should be less prone to a cyclical pullback in hyperscale spending.
Meta is the best buy for investors looking for companies that are already capitalizing on their AI investments. Its business model is significantly different from other major hyperscalers (and key Nvidia customers) like Amazon, Microsoft and Alphabet, which are investing in data center infrastructure to meet demand for cloud services and artificial intelligence, even if it takes a sledgehammer to free up cash flow (FCF).
The social media titan is one of the best examples of a company quickly monetizing AI rather than building an AI infrastructure and hoping customers see a return on their AI spend. AI is enhancing the Meta family of apps (Instagram, Facebook, Messenger and WhatsApp) for users, creators and advertisers.
Meta uses AI to connect users with content and ads that align with their interests. AI powers Meta’s open source Meta AI (Llama) large language model, which powers Meta AI assistants. Meta’s Reality Labs division, which includes virtual and augmented reality products and metaverse projects, is also investing in AI-powered hardware.
Perhaps the biggest advantage of Meta is that you can afford to spend aggressively because the family of apps is so profitable. In many ways, Meta is an AI snowball. Investments in AI enhance the application family of businesses, accelerating high-margin growth and driving FCF, which can be used on projects that may take several years to become profitable or fail completely.
In total, Nvidia and Meta are high-conviction buys for investors who believe the potential rewards of these companies far outweigh the risks discussed. The cheaper both stocks become, the more risk is taken off the table for long-term investors.
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Daniel Foelber has positions at Nvidia. The Motley Fool positions and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool has a disclosure policy.
Nvidia and Meta platforms are now cheaper than the S&P 500. Which “Magnificent Seven” Stock Is the Best Buy in March? was originally published by The Motley Fool
