Given that the Magnificent Seven stocks sitting atop the public U.S. market – Microsoft, Apple, NVIDIA, Alphabet, Amazon, Meta and Tesla – represent about 25 per cent of its value, and we know this kind of overconcentration doesn’t last forever, investors can and should treat them as indicators of market sentiment and potential allocation opportunities to come.
Let’s go over recent developments at each mega-cap name and see what actionable insights emerge for further consideration:
Microsoft
The last significant update from Microsoft, the largest Magnificent Seven stock at US$3.39 trillion in market capitalization, concerns a US$3.3 billion investment to catalyze artificial intelligence (AI) development in the U.S. state of Wisconsin. The investment package includes computing and AI infrastructure, the country’s first manufacturing-focused AI co-innovation lab, and an AI skilling initiative that will train 100,000 residents with essential AI skills.
The story directs our attention to Microsoft’s market leadership when it comes to AI offerings, including Copilot and Azure – which have at least one analyst forecasting a more than 27 per cent jump from the current stock price.
Microsoft (NDAQ:MSFT) has added 23.16 per cent year-to-date and 233.27 per cent since 2019, last trading at US$456.78 per share.
Apple
Apple, market cap US$3.31 trillion, released its Apple Intelligence system in early June, bringing generative AI to the Iphone, Ipad and Mac computer, and entering the ring with competitors such as Google’s Gemini and Microsoft’s Copilot when it comes to expediting user productivity through understanding and creating language and images, navigating through apps, and learning from user data to simplify everyday tasks. According to Will Ashworth at InvestorPlace, the release holds the potential to kickstart the stock and make up for its tepid performance year-to-date.
Apple stock (NDAQ:AAPL) has added 16.76 per cent year-to-date and 324.50 per cent since 2019, last trading at US$216.75 per share.
NVIDIA
NVIDIA, market cap US$3.06 trillion, reached the enviable position of the world’s largest company earlier this month, only to relinquish it days later as traders took advantage of the bump in stock price to take profits off the table.
As the largest AI chip maker, NVIDIA finds itself as the beneficiary of the ongoing AI boom, with Amazon, Google, Meta and Microsoft as top customers, Q1 FY2025 profits up by more than 600 per cent year-over-year, and its growth runway ripe for expansion across various non-cloud sectors such as consumer internet companies, automotive manufacturers and healthcare providers over the next few years. The AI tailwind led Erin Jackson of EMJ Capital to predict that NVIDIA stock will more than double from its current price by the end of the year.
NVIDIA stock (NDAQ:NVDA) has added 158.04 per cent year-to-date and 2,999.75 per cent since 2019, last trading at US$124.30 per share.
Alphabet
The latest and greatest from Alphabet, market cap US$2.27 trillion, involves the hiring of Anat Ashkenazi as its new chief financial officer effective July 31. Ashkenazi serves as executive vice president and chief financial officer of Eli Lilly (NYSE:LLY), where she has worked since 2001.
The new hire points to how Alphabet has the lowest price-to-earnings, price-to-book and price-to-sales ratios among its peers, making the stock a unique relative bargain opportunity, despite being one of the most widely held and covered companies in the world.
Alphabet stock (NDAQ:GOOG) has added 32.19 per cent year-to-date and 226.07 per cent since 2019, last trading at US$184.49 per share.
Amazon
Amazon, market cap US$2.05 trillion, and the largest e-commerce company in the world, will hold its 10th Prime Day on July 16-17, offering millions of discounts for Amazon Prime members across more than 35 categories.
The company’s diversified business holdings, which include everything from movie studios, to grocery, to AI, are expected to generate record cash flow in 2024, and play out multiple catalysts over the next few years to propel the stock to further heights.
Amazon (NDAQ:AMZN) has added 31.53 per cent year-to-date and 102.99 per cent since 2019, last trading at US$197.20 per share.
Meta Platforms
Meta, market cap US$1.28 trillion, which boasts more than 3.2 billion daily active users across its social media networks, was recently accused of breaking European digital competition law by forcing users to pay for ad-free versions of Facebook and Instagram or opt into versions with ads that collect personalized data. The news, following similar accusations directed at Apple and Alphabet, could lead to a more than US$13 billion fine for Meta as soon as March 2025.
Despite the dangers of AI models, including their need for vast amounts of data to hone their predictive capabilities, analysts are confident in Meta’s multi-program approach to AI and the network effect behind its mammoth user base, assigning the stock about a 6 per cent upside through 2024, which is on top of more than doubling the performance of the Nasdaq Composite Index year-to-date.
Meta stock (NDAQ:META) has added 45.74 per cent year-to-date and 156.97 per cent since 2019, last trading at US$504.68 per share.
Tesla
Tesla, the smallest Magnificent Seven stock at US$669.98 billion in market cap, is expected to release lower year-over-year deliveries for Q2 2024 on Tuesday, weighed down by a short-term slump in EV demand and increasing competition from China, marking the first time in its history the company has posted two consecutive quarters of declining deliveries.
That said, Dan Ives, an analyst at Wedbush, sees about a 30 per cent upside from the current stock price backed by Tesla’s growth in AI and robotics, as highlighted by its increasingly autonomous full self driving feature and its new robotaxis to be unveiled on Aug. 8.
Tesla stock (NDAQ:TSLA) has given back 15.52 per cent year-to-date, but has added 1,250.45 per cent since 2019, last trading at US$209.86 per share.
Join the discussion: Find out what everybody’s saying about the Magnificent Seven stocks on the Microsoft Corp., Apple Inc. NVIDIA Corp., Alphabet Inc., Amazon Inc., Meta Platforms Inc. and Tesla Inc. Bullboards, and check out Stockhouse’s stock forums and message boards.
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(Top photo: Adobe Stock)
