Forget Nvidia: buy this magnificent artificial intelligence (AI) stock instead.

Nvidia has captured the vast majority of investment in artificial intelligence (AI). This has shown in its expensive valuation, and I think it’s time for investors to look elsewhere for AI investments.

Meta platforms (META 0.07%) it’s one of the most important AI investments that I think doesn’t get enough attention. This is a top-tier company and its valuation is attractive despite the stock being near all-time highs. I think Meta is one of the best buys on the market and should be considered long before Nvidia.

Meta has a cash cow to fund its AI research

Meta Platforms is the parent company of the very popular social media platforms Facebook, Instagram, Threads, WhatsApp and Messenger. Meta makes money on these platforms through advertising. Indeed, 98% of Meta’s Q2 revenue came from advertising, so it’s critical that this industry continues to do well. Advertising is cyclical, so this part will eventually see some challenges, but it’s doing great now.

The company also needs to keep innovating to stay at the top of its game, which is why it’s investing so heavily in its AI models. Meta’s generative AI model, Llama, is currently in its 3.1 version. However, Meta is already working on Llama 4, which is expected to take 10 times more computing power than the previous generation due to its more in-depth training.

By building an industry-leading AI platform, Meta can integrate it into advertising to better identify ads and make them more personalized. This has implications for its virtual and augmented reality products.

Reality Labs is another division of Meta, but so far it’s actually spending money. In Q2, it generated just $353 million in revenue, while running up a $4.5 billion bill in operating expenses. This division is home to products like the Meta Quest, but will eventually include more practical products like the sunglasses it collaborated on with Ray-Ban.

These sunglasses don’t have a lot of practical uses other than streaming video from your perspective. Finally, Meta’s AI model could take the video and use it to provide information about a task, such as cooking. The possibilities for these assistants are endless, and Meta, with more resources than most of its competitors, will likely lead the way.

This is why Reality Labs burns so much money: it pioneers unexplored possibilities. Fortunately, the Meta advertising platform makes enough money that the combined business is still a great investment.

Meta has strong upside at a great price

Even with Reality Labs losing so much money in Q2, Meta produced an operating profit of 38%. Combined with strong revenue growth of 22%, this is a perfect recipe for a business that can grow profits quickly. That’s exactly what Meta did in Q2, with earnings per share (EPS) up 73%.

While it’s not quite Nvidia-level performance, it far exceeds that of a Apple or Microsoft. These two trade for forward earnings of 34 and 32 times, respectively. This is a huge premium over S&P 50023 times price tag for anticipated earnings. However, neither of these two is growing at such an impressive rate.

Meta Platforms, trading for around 25 times forward earnings, looks like a much better buy. That’s much lower than Nvidia’s 42 times earnings price, meaning two shares of Meta control roughly the same amount of the company as one share of Nvidia.

META PE Ratio data (before) by YCharts

With Meta, the business just has to maintain the status quo and might even go down a bit. With Nvidia, they have to maintain perfection or the stock will be sold off drastically.

I like to have some margin of safety in my investments, and Meta Platforms probably has the best of all the big tech companies. Meta is a fantastic AI investment and remains reasonably priced despite nearing an all-time high. Investors should have Meta at the top of their shopping list when it comes to looking at AI companies.