With $50K to invest and torn between Microsoft and Meta—which one is the better pick?

If you’ve got cash on hand to put to work, perhaps there’s no better time than now with the Nasdaq 100 now down almost 8% from its recent highs. The technology sector had some spectacular winners in recent years, but in recent weeks, it’s also seen some spectacular blow-ups, with names like Tesla (NASDAQ:TSLA) leading the downward charge, now down close to 42% from its December highs. You can bet that such a big plunge in an influential Magnificent Seven company is going to weigh heavily on markets and the psyche of growth-minded investors. It’s not just Tesla that’s been rolling over of late.

Nvidia (NASDAQ:NVDA) nosedived more than 8% following the release of some pretty good record earnings results. But with such a hefty valuation, investors were sure to look for hair on the quarter. And they found it, with some pointing the magnifying glass on the company’s gross margin guidance, which while not horrid, did not align with expectations. 

Mag Seven under pressure

All seven of the Mag Seven have faced considerable pressure of late, including the year-to-date “star” that was Meta Platforms (NASDAQ:META), which saw its shares surge close to 23% year-to-date before its most recent late-February correction. Meanwhile, another AI winner in Microsoft (NASDAQ:MSFT) has also been heading south after its “lost year” that saw no gains for investors over the past year.

As investors sour on the Mag Seven, which, as a group, are now in correction territory, buying the dip could prove wise if you’re comfortable placing a bet on the big AI spenders.

However, I wouldn’t sink a considerable sum like $50,000 into a single name at one time (I’d much rather dollar-cost average across a broader basket of Mag Seven stocks), I do find that Microsoft and Meta are among the best of the batch to watch closely as they experience that sinking feeling, which, I believe, has more to do with sector weakness and tariff terrors than anything else. So, is MSFT or META the better bet going into March? Let’s find out.

Microsoft

It’s easy to grow tired of Microsoft stock as it experiences a leg lower after consolidating for just over a year. As shares fall below a key support level of around $395, it seems like the next leg could be lower as shares look a bit toppy. Despite the unpleasant chart, I continue to view Microsoft as one of the long-term winners in AI and quantum. The company’s big bets on AI, I believe, will start to show more signs of paying off in the coming years, as AI comes to enhance its many business segments.

Whether we’re talking about AI’s uplifting effect on Azure or AI’s potential impact on video-gaming through its AI gameplay generator Muse, it’s clear Microsoft is more than willing to explore how AI can give its suite a high-growth shot in the arm. 

Furthermore, let’s not forget about Microsoft’s quantum innovations. Its Majorana 1 chip was a profound innovation, but one that Wall Street quickly forgot as shares sank in the sessions that followed. As Microsoft looks to do to quantum what it did for AI, I think it’s an absolute mistake to be a seller on this 16% correction. The stock looks quite cheap at just under 30 times forward price-to-earnings (P/E).

Meta Platforms

Meta Platforms stock fell into a hangover after its historic multi-week winning streak that took shares parabolic. If you thought the ride higher from the low-$600s was steep, get a glimpse of the even steeper descent from the $730s to the $650s, where shares currently sit today. Despite the correction, Meta remains one of the most resilient of the Mag Seven going into spring.

And I think that the latest dip is more of a chance to buy than a sign to bail. The company’s an AI frontrunner that’s also innovating on the front of augmented reality, recently announcing its Aria Gen 2 research smart glasses. Add the recent Meta AI standalone app release announcement, and it remains an exciting time to be a shareholder in a firm that continues to floor it on the disruptive innovations.

As the company reallocates resources towards AI and other high-growth areas, it’s hard to give up on the high-growth name, which may stand out from its Mag Seven peers. At 26.5 times forward P/E after the latest dip, I view Meta stock as a gift for those willing to ride out the waves.

The only thing that may concern some is the valuation remains at the higher end of the recent historical range. If this market sell-off has further to go, Meta is unlikely to be spared as we witness a P/E reversion to the mean of sorts. Either way, I’d treat such a valuation reset as a buying opportunity.

The bottom line

It’s hard to pick between Microsoft and Meta. I’d say it can’t hurt to be a buyer of both, especially if you’ve got a five-figure sum to put to work. Of course, I’d buy incrementally on the way down in case this sell-off has further to go.

If I were forced to pick one name, though, I’d have to go with Microsoft. Its Majorana 1 quantum chip holds a ton of potential and I believe it’s being heavily discounted by the market, possibly due to uncertainties regarding when quantum computing will enter its prime. Though I have no idea when, I do think that Microsoft will be there when it happens. That alone makes it a great long-term bet.

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