Key Points

Meta Platforms is experiencing robust growth in its advertising business.
If one of Meta's emerging products succeeds, the stock could surge significantly.

The U.S. stock market sits near record highs, yet certain standout stocks remain available at compelling discounts. These are major companies expanding quickly, but currently overlooked by the market, rendering them undervalued.

Among the most prominent opportunities today stands Meta Platforms (NASDAQ: META). While investors express skepticism toward its substantial artificial intelligence (AI) expenditures, early returns from these investments are already emerging.

Here is why this stock merits consideration for portfolios before broader recognition elevates its price.

Image source: Getty Images.

Meta Platforms is branching out

Meta Platforms runs some of the globe's leading social media platforms, such as Facebook and Instagram. Advertising sales on these sites generate nearly all its income, and AI enhancements have sharpened this operation considerably. Meta's advanced AI tools now enable advertisers to generate customized ad variants precisely suited to individual viewers.

Moreover, AI refines ad targeting precision, amplifying effectiveness. Superior ad performance justifies higher pricing for ad inventory, driving revenue upward.

This trend has materialized across recent quarters.

META Revenue (Quarterly YoY Growth) data by YCharts.

Even so, the market fixates less on Meta's impressive expansion and more on its heavy capital outlays for AI infrastructure and the Reality Labs unit.

Concerns over elevated spending are understandable, yet Meta advances multiple AI initiatives. CEO Mark Zuckerberg highlighted that the Meta Superintelligence Labs is nearing its debut model release, positioning it to "deliver personal superintelligence to billions of people."

Success here could establish Meta as a premier AI contender, introducing unpriced software innovations. Additional ventures, like AI-powered smart glasses, hold potential for fresh revenue if they gain traction - streams not yet valued in current assessments.

Market unease with Meta's AI approach has compressed its valuation to attractive levels.

META PE Ratio (Forward) data by YCharts.

Trading below 19 times projected forward earnings, Meta undercuts the S&P 500 (SNPINDEX: ^GSPC), which commands 21.9 times. This holds despite Meta's revenue growth exceeding 30% annually - well above market norms - positioning it as a prime buy opportunity today.