The Nasdaq Composite (^IXIC 0.46%) index is down 7.5% from its recent all-time high as I write this, led by sharp declines in many of the semiconductor stocks at the center of the artificial intelligence (AI) revolution. Investors are worried about the sustainability of the AI infrastructure spending boom, but this might be creating an opportunity for investors.
Meta Platforms (META +0.76%) is a major buyer of AI chips, but Wall Street might welcome a spending slowdown (if one were to eventuate), because it would allow the company to retain more of the substantial cash flow from its social media advertising business. Then there’s Lemonade (LMND +11.66%), which is having incredible success in transforming the insurance industry using AI.
These two stocks trade at attractive valuations right now, so here’s why they might be great long-term buys during the latest bout of tech market volatility.
Image source: The Motley Fool.
The case for Meta Platforms
Meta owns social media platforms Facebook, Instagram, and WhatsApp, which are visited by more than 3.5 billion people every day. Since the company has already captured almost half the world’s population, it’s becoming harder to attract new users, so now it’s trying to boost engagement instead. If each existing user spends more time online each day, they will see more ads, and Meta will make more money.
AI is a powerful tool in that respect. Meta embedded it into its recommendation algorithms, where it learns which types of content each user enjoys and shows them more of it to keep them online. But CEO Mark Zuckerberg says the company’s latest AI models can achieve a much deeper understanding of every picture and video on Facebook and Instagram, as well as every user’s goals, paving the way for the most accurate content recommendations yet.
Zuckerberg believes AI will reach a point where it’s even creating customized content tailored to Meta’s users’ preferences. Therefore, Facebook won’t simply offer entertainment; it will become a place where people can improve their lives, whether they want to learn how to cook or how to manage their finances. This should lead to much higher engagement over the long term.
Today’s Change
(0.76%) $4.43
Current Price
$589.02
Key Data Points
Market Cap
$1.5T
Day’s Range
$579.30 – $591.29
52wk Range
$520.26 – $796.25
Volume
136.1K
Avg Vol
16.8M
Gross Margin
81.94%
Dividend Yield
0.36%
Meta generated $56.3 billion in revenue during the first quarter of 2026 (ended March 31), a 33% increase from the year-ago period. That growth rate accelerated from 24% in the previous quarter, three months earlier, a sign that the company’s AI strategy is yielding results.
Meta stock is trading at a price-to-earnings (P/E) ratio of just 21.3 as I write this, so it’s much cheaper than the Nasdaq-100 index, which has a P/E ratio of 35.3. This suggests it might be undervalued relative to a basket of its big-tech peers.
However, the company is on track to spend up to $145 billion on AI data centers in 2026 to further its AI ambitions, which will weigh on its earnings over the next few years as that infrastructure is depreciated for accounting purposes. This is something to watch over the next couple of quarters — if management pulls back on that spending, Wall Street might view that as a positive sign for the company’s bottom line.
The case for Lemonade
Lemonade offers renters, homeowners, life, pet, and car insurance, and it uses AI for everything from customer interactions to pricing premiums. The customer journey starts on its website, where an AI chatbot named Maya can write a quote in under 90 seconds. For existing policyholders, Lemonade has another AI assistant that can pay claims in just a few seconds. That’s a big improvement from the claims process with traditional insurers, which often involves several phone calls and lengthy waiting periods to get paid.
Lemonade had a record 3.1 million policyholders at the end of the 2026 first quarter, which was an increase of 23% from the year-ago period. It also had $1.3 billion in in-force premium (IFP), which represents the value of the premiums from all active policies. That increased by 32%, and it was the 10th straight quarter in which that growth rate accelerated.
Today’s Change
(11.66%) $6.25
Current Price
$59.83
Key Data Points
Market Cap
$4.1B
Day’s Range
$53.52 – $60.09
52wk Range
$35.70 – $99.90
Volume
26.3K
Avg Vol
1.7M
Since the end of 2022, AI-powered automation has enabled Lemonade to reduce its workforce by 6% while doubling IFP over the same period. The company now has roughly $1 million in IFP per employee, placing it on par with some of the largest insurers in the industry, despite being a mere fraction of their size. If Lemonade continues on its current trajectory, it could become the most efficient insurer in the business.
Wall Street’s consensus estimate (provided by Yahoo! Finance) suggests Lemonade could generate $1.6 billion in revenue in 2027, which would be more than double its 2025 result of $738 million. That places its stock at a forward price-to-sales (P/S) ratio of 2.5.
Therefore, Lemonade stock would have to soar by 116% by the end of next year just to maintain its current P/S ratio of 5.4, which is roughly in line with its three-year average.
Data by YCharts.
But the story gets better, because Lemonade plans to grow its IFP by a whopping 670% to $10 billion over the next decade or so, which could fuel a similar increase in its stock.