Over the past two years, the so-called “Magnificent 7” group of mega-cap tech stocks have dominated the market’s overall performance. Investors who bought these stocks directly have obviously benefited from their growth, but even passive investors owning index funds have profited from the moves these stocks have made, due to their sheer weighting in the indices.

That said, in recent months, more attention has been paid to certain Magnificent 7 stocks over others. Certain companies have underperformed, and others have led the AI-linked market rally to achieve highs many investors may not have thought possible.

The question is which three of the top 7 growth stocks in the market should investors own over the long-term? Here are my three top picks in the group as it stands right now.

Key Points About This Article:

• The Magnificent 7 group of tech stocks have continued to drive market returns, and remain among the most highly-valued stocks in the market, for good reason.
• Of the top 7 most-watched stocks in the market, here are the three I think are best-positioned to rally to new all-time highs in the next leg of this bull market.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Meta Platforms (META)

The company’s robust free cash flow suggested ample room for continued stock price appreciation over time. On any fundamental basis, running a free cash flow yield model or a discounted cash flow model will get most investors to a stock price that’s way above where it trades today. That is, assuming the company can continue to deliver the kind of cash flow growth it has in the past. 

This past quarter, the company posted growth, with revenue up 22% year-over-year to $39.10 billion. Daily active users across its apps rose to 3.27 billion, marking a 6.5% increase from the previous year. And notably, the consensus analysts forecast is for Meta to post revenue growth of 17.5% this year and 12.5% in 2025. Such metrics, if hit, would translate into a three-year compound annual growth rate of 10% for 2024 and more than 15% by 2025.

With plenty of growth ahead, particularly within the company’s AI integrations and increased efficiency/capabilities tied to these investments, there’s a lot to like about where the company could be headed from here.

Alphabet (GOOG)

Alphabet competes with Meta in the global digital advertising space, and has been losing ground in some regards. However, the company’s YouTube division has seen strong growth, propelling earnings which exceeded estimates in Q2. Alphabet’s revenue rose 14% to $84.7 billion and GAAP earnings increased 31% to $1.89 per share, driven by strong cloud computing growth and cost control. Digital ad and public cloud spending are projected to grow 10% and 19% annually through 2028, respectively, supporting Alphabet’s potential for double-digit sales growth.

Additionally, Google captured 12% of public cloud spending in Q2, up from 11% the previous year but still behind Amazon (32%) and Microsoft (23%). Investments in AI tools like Gemini could further boost Google’s market share, and the company’s cloud division is another cash cow I could see providing earnings growth acceleration moving forward. Overall, Alphabet is a tech behemoth that’s going to be around a decade or two from now – I think that’s a virtual certainty. This stability is worth the multiple. 

Amazon (AMZN)

Currently, the company dominates the U.S. e-commerce market, with a 38% overall market share in this space. However, in the world of cloud, Amazon’s AWS division controls nearly one-third of the global cloud market, allowing the company ample cash flow to invest in its core logistics network which has scaled to be one of the biggest in the world.

With a forward price-earnings ratio around 29-times, Amazon is the priciest stock on this list. But it’s also seeing rather rapid earnings growth, with projected EPS growth over the coming years suggesting 23% expansion is likely.

I think the company’s dominant position in these critical markets, and its ability to grow organically, set the company up well for growth in what could be a more hawkish regulatory environment moving forward.

Verdict

Well the 3 stocks rank at the top of my list of “Magnificent 7” stocks, META’s AI capabilities and still being founder led makes META my favorite stock to buy out of this group.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.