The “Magnificent Seven” cohort of stocks has done quite well over the past few years, with many of them thriving from the massive AI building spree going on. However, these stocks have been unloved as of late, and many are well off their all-time highs. This group of seven stocks is made up of:
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Nvidia (NASDAQ: NVDA)
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Apple
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Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL)
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Microsoft (NASDAQ: MSFT)
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Amazon (NASDAQ: AMZN)
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Meta Platforms (NASDAQ: META)
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Tesla
Of those seven stocks, I think five are great buys. Let’s take a closer look.
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Nvidia may be the largest company in the world, but its stock looks like a screaming buy. It only trades for 22.2 times forward earnings and is expected to deliver incredible growth during this year. Wall Street analysts project Nvidia’s revenue will rise at a 70% pace this year, showcasing the huge demand for its graphics processing units (GPUs).
Despite this, Nvidia is down more than 10% from its all-time highs. I think right now is an excellent investment opportunity for Nvidia, as AI demand is still expected to rise for many more years.
Alphabet is similarly down around 10% from its highs, giving it a breather from when it was setting new record highs day after day toward the end of last year. Last year at this time, Alphabet’s AI aspirations were a bit of a joke. Now, Alphabet and its generative AI model, Gemini, are among the top picks, and Alphabet has solidified itself as a force to be reckoned with in the generative AI arms race.
Alphabet has the resources to outcompete nearly every competitor in this arena, making it a great long-term AI pick.
Microsoft may be my favorite pick in this group of five, mainly because of how cheap it is. The stock is down more than 25% from its all-time high, and the valuation is also absurdly cheap compared to where it has traded at over the past decade.
It’s not often that Microsoft reaches a valuation of about 25 times earnings, and every time it has, it has been an excellent buying opportunity. I think Microsoft is a top stock pick right now, as its business is still excelling, but the stock has just fallen out of favor with the market.
Amazon is down around 15% from its all-time high, but it’s starting to come roaring back as an AI investment pick. While most may point to its commerce business as why they own Amazon stock, the reality is that Amazon Web Services (AWS), its cloud computing wing, is the best reason. In the fourth quarter, it grew revenue at a 24% pace, the best quarter in over three years. This helped boost Amazon’s profitability and growth overall. During Q4, AWS made up 50% of Amazon’s operating profits.