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Last year, investors were wondering how Alphabet traded so cheaply before it more than doubled. This year, investors ought to wonder why Meta Platforms (NASDAQ: META) is trading at such a cheap valuation, because it will probably look a lot different in 2027.

Meta Platforms trades at the lowest price-to-earnings (P/E) ratio among the Magnificent Seven stocks, and yet, it's growing faster than most of them. If you review the fundamentals, Meta Platforms' stock looks very undervalued, and it may not trade at this level again for several years.

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Meta Platforms is down by more than 10% year to date, but its fundamentals keep climbing higher. Revenue surged by 33% year over year in the first quarter, with operating income up by 30% year over year. While some growth stocks endure corrections in these situations due to high valuations, a 20.5 P/E ratio isn't that high for Meta Platforms' fundamentals.

Not only is Meta Platforms cheaper than the other Magnificent Seven stocks, it also has a lower P/E ratio than the S&P 500, which currently sits at 32.2. Meta Platforms is posting higher revenue and operating income growth rates than the majority of S&P 500 companies, and it's even edging out most of the Magnificent Seven stocks in that regard.

Online advertising remains the bread and butter of the Meta Platforms business model, and that's not necessarily a problem. Online ads have high profit margins and have served the company well for many years. Meta Platforms has mastered the ability to increase the average revenue per user, even as its user growth numbers gravitate toward the low single digits year over year.

There's absolutely nothing wrong with Meta Platforms making most of its money from online ads, since growth rates are still high, but Meta Platforms is still starting to diversify, which should make investors excited.

If Meta Platforms can diversify, in the same way Alphabet and Amazon started several profitable segments under their corporate umbrellas, it could potentially lead to the stock more than doubling within a year, just like Alphabet recently did.

Meta Platforms is also diversifying in the right industry, artificial intelligence. Meta Superintelligence Labs released its first AI model, and CEO Mark Zuckerberg said the company is "on track to deliver personal superintelligence to billions of people." This product aligns with Superintelligence Lab's ambition to create systems that surpass human intelligence in reasoning, memory, and knowledge. That type of product can introduce new, lucrative revenue streams.

Investors shouldn't hold their breath waiting for other business segments to affect Meta Platforms' revenue. Online ads made up 98.4% of total revenue. However, these opportunities are growing in the background. Meta Platforms is undervalued just for its advertising business, with all of its side quests serving as long-term catalysts that can lead to future gains.

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Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, and Meta Platforms. The Motley Fool has a disclosure policy.

This Might Be the Cheapest Meta Platforms Trades in Years. Here's Why. was originally published by The Motley Fool