The “Magnificent Seven” group of stocks have been stock market leaders over the past five or so years. In no particular order, they are:
Nvidia(NASDAQ: NVDA)
Apple(NASDAQ: AAPL)
Alphabet(NASDAQ: GOOG)(NASDAQ: GOOGL)
Microsoft(NASDAQ: MSFT)
Amazon(NASDAQ: AMZN)
Meta Platforms(NASDAQ: META)
Tesla(NASDAQ: TSLA)
All seven of these stocks are trillion-dollar companies and are among the 10 largest companies in the world. These stocks combined account for a significant chunk of investment indexes like the S&P 500 and the Nasdaq Composite. So, their continued success plays an outsized role in the success of investors who buy stakes in funds that mirror these indexes.
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But of these seven, which ones are the best buys? Let’s take a look at these companies and rank them from worst to best as investment options.
Image source: Getty Images.
Tesla is at the bottom of this list, but that’s not a sign for investors to sell. Just because it isn’t the best buy doesn’t instantly mean it’s a sell. The reality is, Tesla is working through some headwinds right now. The stock’s valuation is severely out of balance. Given how high it is, several programs still under development, including a robotaxi service and a humanoid robot division, would need to start generating substantial cash flows over the next decade to justify the price.
The best time to buy Tesla stock has been when it’s trading well off its all-time high. It’s currently down about 20%, but it routinely pulls back 50% or more before eventually recovering. I think waiting until the next big drop is the smart move, as the market is historically hot and cold with Tesla’s stock.
Apple is this low on the list partly due to its concerning valuation. Apple is among the slowest-growing stocks on this list, though its most recently reported quarter was the best in years. Despite that, it has the third-highest forward price-to-earnings ratio (after Tesla and Amazon).
Data by YCharts.
Apple has slowed in its development of innovative products that consumers demand, and it seems to be sitting on the sidelines during the increasingly important artificial intelligence (AI) arms race. Investors appear disappointed about its future prospects, and I am too. I don’t think it’s a top stock to buy now.
Although Alphabet is No. 5 on this list, there’s a huge jump between it and Apple. Any stock from here on out I consider an excellent buy, and investors shouldn’t get too caught up in the individual ranking. Alphabet has come back from the dead to emerge as one of the top generative AI competitors and has transformed its legacy Google Search business, placing AI front and center.
This tells me all I need to know about Alphabet’s prospects, and I think it’s a strong stock to consider buying now. But with its relatively higher valuation (29 times forward earnings), it’s not as timely a buy as the others.
Amazon may be more expensive at 32 times forward earnings, but I think investors aren’t pricing in the massive upside of its AWS business correctly. Azure and Google Cloud were early movers in building out AI computing capacity, but AWS has now caught on to the trend and is seeing growth, especially in its custom AI chip division.
This could lead to strong upcoming growth, and I think Amazon will surprise a lot of investors over the next few years.
Meta Platforms is the cheapest stock in the group, trading for 22 times forward earnings. For reference, the S&P 500 trades at 20.3 times forward earnings, so it is closest to the broader market’s average despite strong growth. Meta’s social media dominance has given it incredible pricing power over its ad divisions, leading to strong growth. I don’t see that slowing down anytime soon, making today’s slightly above-average valuation a great buying opportunity.
If one of Meta’s AI investments pans out, the stock could have even higher upside — something that’s not priced into the stock at all.
Nvidia didn’t quite secure the top spot in this group, but it was close. There is no company growing faster than Nvidia on this list — it’s in a league of its own.
Data by YCharts.
Furthermore, Wall Street analysts expect its revenue growth to accelerate throughout calendar year 2026, with 79% growth in fiscal 2027’s Q1 and 85% in fiscal Q2. If Nvidia can sustain these growth rates throughout this year and into calendar 2027, then today’s 23.9 times forward earnings looks like an absolute steal.
Microsoft tops the list of Magnificent Seven stocks to buy right now, and it’s mostly due to valuation. While it isn’t the cheapest stock from a forward earnings standpoint (24.6x), it used to be. Microsoft has lost its premium despite posting solid results. It now trades at some of the lowest prices over the past decade when trailing earnings are used.
Data by YCharts.
You don’t get many opportunities like this with Microsoft’s stock, and investors need to take advantage of the low price now, as it won’t come around very often.
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Keithen Drury has positions in Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla and is short shares of Apple. The Motley Fool has a disclosure policy.
I Ranked the “Magnificent Seven” Stocks From Best to Worst Buys Right Now was originally published by The Motley Fool
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