$META · Parkev Tatevosian, CFA · 2026-10-26

Today I wanted to compare Nvidia and MetaPlatforms to answer which one I think is the second best stock to buy right now. These two stocks have occupied the first and second positions in my rankings over the past few months.

I am very optimistic about these two companies. I own shares in both of them. They are two of the biggest centers in my portfolio after Netflix , which is the biggest center in my portfolio. after I analyzed MetaFinancial's quarterly results this week.

I wanted to start by comparing the future prospects for earnings per share for both Nvidia and MetaPlatforms.

In fact, Meta Platforms dropped one of these hints earlier this week when announcing its results. They said they are still developing budget capacity plans for next year, but we expect to continue investing heavily to support our core business and emerging AI initiatives.

From this I understand that they will spend much more next year compared to this year. Otherwise, they would not have expected investment to continue so strongly. They would have said something like, "We have reached the peak of our investments, or we will reduce our investments next year."

This is the kind of language you would have heard from Meta if they were simply planning to gradually increase or perhaps decrease their spending on artificial intelligence. Meanwhile, the forward forecast for earnings per share growth at MetaPlatforms over the next several years is 19%.

If you're a gambler, I'd bet that Meta's earnings growth over the next few years will be greater than 19%. Now, it is highly uncertain given the significant variation, and there is much mystery surrounding how Meta will profit from its latest hit product, the Meta Muse personal agent, which got off to a great start with over 10 million downloads.

But making profits from this personal agent is still in its early stages, and the extent to which they can profit from it is still questionable. But Mark Zuckerberg, CEO of Meta , said they would be able to generate at least as much revenue from this personal agent as they do from each user of their social media apps.

This provides investors with a minimum and starting point for estimating average revenue per user of the "MetaMuse" application. The next metric I wanted to compare them with was cash flow from operations compared to sales.

This is more important for Meta than it is for Nvidia. The reason is the amount of money that Meta Platforms estimates it will spend over the next few years, as they will need liquidity to support those investments.

Otherwise, they may have to issue more shares, which I believe they will, because the stock split announcement they made when announcing their quarterly financial results, and the change in their stock class structure, suggests to me the possibility of issuing shares just as Alphabet did when it raised $90 billion from a share sale.

I believe that Meta Platforms will either make one or more large IPOs between now and the next 36 months to support these investments in artificial intelligence.

Meta Platforms boasts an excellent cash flow from operations to sales ratio of 55%, a ratio that many companies around the world would certainly envy. while MetaPlatforms' ratio has declined since 2017 as the business required more investment to support these growth initiatives.

Although I would say that Meta has become incredibly efficient. In the last quarter ended, the company achieved revenue growth of 26% with fewer employees, 12% fewer than they had last year.

So, they are achieving a significant acceleration in revenue growth with fewer employees. Therefore, revenue per employee, and productivity per employee, increase significantly as a result of their investments in artificial intelligence.

So they not only acquire new products that are already very popular in the market, but they also work on improving the productivity of their own processes. Meta Platforms is proving to investors that they are already reaping the rewards of their investments in artificial intelligence .

The next metric I wanted to compare these two companies with is return on invested capital. Again, I think this metric is more important for Meta than for Nvidia because Meta invests much more capital in the operations side of its business than Nvidia does.

Meanwhile, Meta is going through the opposite type of scenario where Meta will spend hundreds of billions of dollars investing in its AI capabilities through 2028, and over the next few years.

As I mentioned earlier, based on what the management team has hinted at, they are likely to spend more in 2027. I then estimate that they are likely to spend more again in 2028.

Starting in 2029, I think the meta will tell investors that we have reached peak spending, and that spending from this point onward will either remain steady or begin to decline.

At this point, Meta will have already begun to reap more significant benefits from its investments in artificial intelligence. They will have a more specific plan for how to profit from their personal agent and all their investments in large language models.

They will begin to reap more productivity benefits, and the core business, which is social networking, is already showing performance improvements thanks to artificial intelligence, and these performance improvements are likely to accelerate by next year in 2028.

Here, I see the returns of Meta Platforms on invested capital exceeding 30%, and perhaps approaching 35%. Based on the forward price-to-earnings ratio, MetaPlatforms shares are trading at 18.5.

It is a cheap valuation and undervalued when viewed on its own. This is one of the reasons why I love Meta shares and why I own them. Growth is accelerating. It is approaching the forefront in terms of large-scale language models and investment in artificial intelligence. Therefore, I like this rating.

At the same time, I performed a similar calculation for Meta Platforms and concluded that the company's value was $945 per share . The market price today is 646. I see Meta as being undervalued by about 46%.

Therefore, these are excellent companies. I am optimistic about both. I own both of them. I am interested in buying more from these two companies. But if I had to choose first and second place today, after evaluating Meta's results, I would say that Meta Platforms is second and Nvidia is first in my rankings.