Alphabet (GOOGL -1.62%) (GOOG -1.48%) and Meta Platforms (META -0.54%) are, without a doubt, two of the most dominant enterprises on the face of the planet. This is evidenced by their remarkable journeys in the past couple of decades to get to a combined market cap of $3.6 trillion. They have both historically done a fantastic job taking care of investors.

It's not surprising that these businesses are fully focused on the shifting technological landscape -- one that's placing artificial intelligence (AI) above any other strategic objective. Alphabet and Meta have their own unique strengths to benefit from this trend.

Which of these "Magnificent Seven" companies is the better AI stock to buy right now?

Image source: Getty Images.

The case for Alphabet

While Alphabet has had AI at the forefront of its strategy for about a decade, the business is still pushing the envelope. It continues to release new versions of its Gemini large language models (LLMs). And at its recent I/O developer conference, the company introduced numerous new AI-related features across the business. Most notably, Alphabet announced Agent Mode that can tackle complex tasks on its own from start to finish.

In July 2023, CEO Sundar Pichai mentioned that the company had six different products and services that served at least 2 billion users. Consequently, Alphabet has unrivaled reach to constantly bring new AI tools to markets to almost instant adoption. And with its now highly profitable Google Cloud segment hitting its stride, enterprise customers are increasingly looking to Alphabet as a mission-critical partner for more of their AI needs.

Alphabet raked in almost $35 billion in net income in Q1 of this year. And as of March 31, it had $95 billion of cash, cash, equivalents, and marketable securities on its balance sheet. This just means that the business possesses tremendous financial firepower to keep plowing resources into AI initiatives. Couple this with its already strong position in digital advertising and other tech industries, and it's hard to find any faults today.

The case for Meta Platforms

With 3.43 billion daily active users, Meta is in the same ballpark as Alphabet in terms of a massive user base. Despite its gargantuan size, the social media juggernaut continues to add more users each quarter, underscoring just how invaluable its apps are in the lives of people across the globe.

Founder and CEO Mark Zuckerberg just said that the Meta AI assistant has now reached 1 billion monthly active users. He believes there will be opportunities to monetize all of this activity in the future.

The business makes 98% of its revenue from digital ad efforts. AI is having a positive impact for these customers, helping them more effectively target their audiences.

Meta is also dabbling in hardware. "Ray-Ban Meta AI glasses have tripled in sales in the last year, and people who have them are using them a lot," Zuckerberg mentioned on the Q1 2025 earnings call.

Like Alphabet, this is a financially robust business. Meta had $70 billion in cash, cash equivalents, and marketable securities on the books at the end of Q1. And it generated $17 billion in net income during the quarter. Management plans to spend $68 billion (at the midpoint) in capital expenditures this year to bolster its tech infrastructure. That's a massive sum, but Meta can afford it.

Valuation matters, too

It's becoming strikingly clear that AI will become more important to society and the economy in the future. However, investors shouldn't just throw money at any opportunity in the space. If you pay too high of a valuation, your returns could take a huge hit.

As of this writing, shares of Alphabet trade at a forward P/E ratio of 17.6, which is below Meta's 25 multiple. Nonetheless, these two companies are the cheapest of the "Magnificent Seven" grouping.

In my opinion, investors don't need to pick just one of these dominant businesses. I see no reason why both of these AI stocks can't be bought today. They should do well over the next five years.