Investors still have complete faith in AI, while I continue to accumulate shares in economical investments FTSE100 stocks. So am I missing out on something by not joining the party?

Peak cycle

I make a bold call: the Magnificent Seven – led by Nvidia – probably peaked on October 29. That was the day stocks hit $5 trillion and Meta warned it would miss analysts’ earnings expectations due to soaring capital spending.

Three weeks later, Nvidia’s cash flow also disappointed. So why are AI giants failing?

Beyond skyrocketing valuations and constrained real-world breakthroughs, investors are starting to question some commercial relationships, such as Nvidia’s backing of smaller AI companies that later spend massive on their chips or cloud services.

Is the reckoning for the Magnificent Seven coming? I think so. Classic boom and bust: overspending on modern technology and events like it’s 1999. At the same time, cheaper FTSE 100 shares offer more established opportunities, setting the stage for investors to seek more sustainable investments.

Fallen giant, growing potential

For me, one of the most fascinating FTSE 100 growth stories right now is where things stand Diageo (LSE: DGE). I’ve been following this company for years, but only recently decided to step in. Its brands are already legendary – Guinness, Don Julio, Casamigos – and retain a powerful, global appeal.

I am excited about the continuing trend of premiumization. Consumers may drink differently today, but they still pay for quality. The company is adapting well, changing its strategy to reflect changing habits, from at-home social campaigns to ready-to-drink formats aimed at younger audiences.

The risk remains. Consumer spending may remain subdued, inventory cycles may persist, and global macro conditions may impact near-term performance.

However, with a forward earnings multiple of just 13 – well below the long-term average – I believe the risk is largely priced in. The 4.3% dividend is a premium, but my focus is on powerful brands and a potential turnaround from a modern cost-conscious CEO. The reason I keep the Diageo is because it now feels like a stock with room to run, setting the stage nicely for my next choice.

Energy giant

For me, BP (LSE:BP.) is a unique contrarian opportunity to consider. Everyone is negative about oil, but that’s why I accumulate. Since resetting its strategy in February and scaling back high-priced renewable energy projects, the company looks much more focused and disciplined.

Third quarter results highlighted this: refining exceeded expectations, as evidenced by higher realized margins and minimal corrective activity.

On the mining side, the project schedule is impressive, with 12 discoveries in 2025 alone, including Boomerangue in Brazil, which is the biggest find in 25 years.

Cash flow is solid, with operating cash flow comfortably covering the dividend yield of 5.6%.

BP’s break-even point is $40 per barrel. However, if prices remain in the $60 range over the long term, the company may not achieve its ambitious financial goals, which could impact the share price and shareholder returns.

In my opinion, energy seems mispriced today. Geopolitical tensions, US onshoring, growing demand for electricity from artificial intelligence and slower adoption of electric vehicles all favor oil and gas.

Conclusion

For me, it’s stimulating to find undervalued FTSE 100 shares. While the hype pushes others towards high-priced names, I focus on high-quality companies that trade cheaply, offer long-term growth, solid dividends and the potential to steadily grow wealth over time.