Meta Platforms trades at a discount to the broader market despite strong revenue growth, leaving room for gains if the company can deliver new AI products.

What happened: Meta Platforms is down 25% from its all-time high after a recent tech sell-off. The stock trades at 19 times forward earnings, below the S&P 500's 21.5 times forward earnings, even though Meta grew revenue at a 33% pace in its most recent quarter.

Why it matters: The market is skeptical about Meta's hundreds of billions of dollars in spending on AI data centers because those investments have so far only boosted the company's core advertising business. With Meta's growth potential far greater than the S&P 500's roughly 10% annual growth, the valuation gap suggests the stock may be underpriced—but only if Meta can launch meaningful AI products to justify its spending.

What to watch: Meta is working on a personal superintelligence model that would give people a powerful AI assistant, as well as AI glasses to help contextualize their surroundings. If Meta delivers these products, the stock has significant upside potential; if it does not, the stock may remain at current levels until the company completes its AI spending.