The “Magnificent 7” stocks don’t seem worth giving up on. Not after they’ve already invested so much in artificial intelligence (AI) technologies, many of which may start showing signs of paying off come 2025. Undoubtedly, there are more than a handful of notable bulls who view the Magnificent 7 members as great buys on the way up.

Recently, Wedbush Securities analyst Dan Ives pounded the table on the three names — Apple (NASDAQ:AAPL), Nvidia (NASDAQ:NVDA), and Microsoft (NASDAQ:MSFT) — as they battle to become the world’s first company to boast a $4 trillion market cap. Ives believes the race to $4 trillion is on over the next six to nine months and that investors should hang in for the ride. 

Apple, Nvidia, and Microsoft, the largest of the Magnificent Seven, may lead in the AI race right now. However, they’re not necessarily the best value options right here, with price-to-earnings (P/E) multiples north of 35 times.

In this piece, we’ll look at three notable recent Magnificent Seven laggards that may be worth picking up on recent weakness. Though their P/E ratios may be extended, I do view them as having growth narratives that still seem underestimated by most of Wall Street.

Key Points About This Article

• Microsoft, Alphabet, and Tesla are attractive Magnificent Seven value plays that are off from their highs.
• AI will play a major role in determining which stock will fare best over the next 12-18 months.
• 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.

Microsoft

Microsoft stock may be no bargain at $416 and change per share (down 11% from its all-time high) and 35.23 times trailing P/E. However, the stock could become a lot more expensive if its countless AI investments continue working their way into earnings growth.

The company’s Copilot AI assistant has enjoyed early success, but over the coming years, we may very well discover that this is just the tip of the iceberg.

In 2025, Copilot Agents and the expansion of Azure AI services could refuel AI enthusiasm and help MSFT stock make a run for new all-time highs. Notably, Copilot Agents for OneDrive could help Microsoft break into the personalized AI scene in a big way as it takes a step closer to achieving artificial general intelligence (AGI). For now, the “personalization of AI” could be the big theme in the new year. And in this regard, Microsoft looks more than prepared.

Additionally, Azure is already the king of the cloud. And come the new year, look for Microsoft to add new AI features that help further extend its lead.

Alphabet

Alphabet (NASDAQ:GOOG) stock has been the value pick of the Magnificent Seven for quite some time. After dealing with regulator backlash and Google breakup jitters, the stock has only gotten that much cheaper versus the pack in recent weeks. At writing, shares are down 13.5% from their highs. Despite the anti-trust overhang and threat of AI-leveraging rivals in search, GOOG stock remains a fantastic AI innovator that retail investors should not count out.

At 18.8 times forward P/E, GOOG stock certainly looks unsustainably undervalued, especially given how fast Gemini is advancing. As the company embraces small modular reactors (SMRs) to help power its AI data centers, Alphabet is very much going full speed ahead in the AI race as it works its way through infrastructure, and the firm embraces nuclear power.

In the long term, it will also be interesting to see how Google’s tensor processing units (TPU) stack up to GPUs. If Gemini and TPUs are the way of the future, the stock could have the most room to run of the Mag 7 stocks. 

Tesla

Investors soured on Tesla (NASDAQ:TSLA) after a “disappointing” robotaxi event, one that didn’t reveal a heck of a lot much other than aesthetics. In any case, the stock looks rather untimely as it sinks lower again. It’s already down close to 46% from its late 2021 all-time high. And given the name, it still looks expensive at 62.17 times trailing P/E, especially where we stand in the auto cycle.

In any case, I would be in no rush to buy the stock quite yet. If robotaxi exposure is what you seek, I find Alphabet to be a far better bet for its Waymo division, which seems to keep rolling along. Though TSLA stock seems overvalued and destined for a more significant fall, I do admit that there’s also a good chance shares could prove severely undervalued now that much of the robotaxi event froth has been wiped out.

Additionally, it seems like nobody believes Musk will be able to sell the Cybercab at $30,000 or less in as little as three years. The odds of such a low price point in such an aggressive timeline, I believe, are extremely low.

However, I suppose there’s a non-zero chance Musk can deliver it on schedule and at the price the fans so desire. In that scenario, Tesla stock may be the wildcard Magnificent Seven stock that pole-vaults over the other six.

My top pick: Alphabet stock

Alphabet stock is just way too cheap right now. Yes, it’s looking the least exciting of the batch while it’s fresh off a beating from regulators.

That said, the stock may have a head-and-shoulders technical bottom pattern in the works, one that could take it right back to all-time highs north of the $190 level. I’m no technician, but given the stock is cheap and technically sound, I’d argue it’s poised for the best finish to the year of all the Magnificent Seven members.

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