The group of so-called “Magnificent 7” mega-cap tech giants continue to dominate the mind share of most investors, with these top high-growth companies continuing to see strong inflows as investors look to remain exposed to growth. Excluding the performance of these top 7 stocks, investors would have drastically underperformed the market in recent years. However, investors who have gone overweight certain names in this group would have outperformed the market by a large degree, and there’s some indication that a divergence (at least in terms of share price performance) could be brewing.
In this piece, I’m going to discuss my top three picks in this group as of today, and why I think these particular companies could be among the best options for investors to hold through 2025 (and of course over the long-term). I’m a long-term investor myself, and fundamentals matter. From that perspective, I think these three companies could be the best buying opportunities this year, particularly if the market takes a leg lower.
Without further ado, let’s dive in!
Key Points About This Article:
- These three Magnificent 7 stocks could be the best options for long-term investors looking to gain exposure to growth right now.
- Here’s why these three stocks could outperform the market in 2025, and why they could be great long-term buys on dips that materialize throughout the year.
- 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)
Meta Platforms (NASDAQ:META) is among the more unique companies I’ve watched in recent decades, with the company strategically delaying its monetization of its applications to build world-class network effects within its portfolio of social media platforms.
This strategy has clearly paid off, with the company seeing incredible earnings growth catch up to its impressive growth in monthly active users (MAUs) in recent years. As the company continues to focus on its monetization efforts across its platforms, with Threads likely being the next target of monetization, investors have plenty to like given Meta’s focus on expanding and integrating its AI offerings into its portfolio of services.
Some have pointed out that Meta’s recent spending spree on Nvidia chips may have been overdone, considering the DeepSeek news we got roughly a week ago. However, with lower costs of production for LLMs comes a key benefit for Meta, and we’ll have to see how this efficiency-hungry company can benefit from these trends (and if they’ll be lasting).
While the social media giant’s multiple is starting to look a bit stretched, this is a company I think has more than enough earnings growth potential to justify its current valuation. And if the stock dips materially from here, Meta will be one I’ll be jumping on this year.
Alphabet (GOOG)
Alphabet (NASDAQ:GOOG) remains the cheapest Magnificent 7 stock, touting a forward price-earnings ratio of around 23-times. That’s still historically expensive for most mega-cap blue chip stocks. But few companies in Alphabet’s weight class can boast the kind of long-term growth trends the search and cloud giant has been able to post in recent decades.
Alphabet’s value comes from its ability to reinvest its cash flows (ahem, the company is currently sitting on just under $100 billion in cash) into higher-margin businesses. Alphabet’s cloud division continues to stand out as a key earnings driver, though its high-margin search business remains the cash cow that will likely continue to power the company’s investment abilities for decades to come.
That said, Alphabet’s relatively low valuation of late stems from not only slowing growth (and slowing growth expectations tied to AI startup competition concerns), but also concerns around the increasingly competitive landscape in the tech sector and how future AI innovations may re-shape the company’s core search business. That said, I think Alphabet has done a good job of integrating AI within its Google search functionality, so these concerns may be overblown. We’ll see.
Despite concerns over AI chatbots challenging Google Search, Bill Ackman saw an opportunity, acquiring over 13 million shares in early 2023. Other big-named investors continue to pile into this stock, given its relative value compared to its historical multiples. So long as this value trade remains in play, GOOG stock is one I think needs to be on every investor’s watch list right now, at the very least.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) rounds out this list of Magnificent 7 stocks worth buying, with many of the same catalysts as the aforementioned giants. The company’s profits are mainly derived from Amazon’s AWS (cloud computing) division, though the company is perhaps better known as the leading e-commerce player in the U.S. Indeed, Amazon’s tentacles reach deep into the pockets of the American consumer, and as a play on broader consumer spending growth, Amazon stock is clearly one worth considering.
However, I think Amazon’s broader investment thesis likely revolves around its core cloud business, which continues to drive significant profit growth for the tech giant. In Q3, AWS revenue grew 19.1% to $27.5 billion, while profit surged nearly 50% to $10.4 billion. In short, this division alone contributed 60% of Amazon’s operating income. Thus, this is the key operating unit I continue to focus on right now.
AWS remains in a growth phase, with generative AI adoption poised to accelerate its expansion and boost Amazon’s earnings. AI-driven tools enhance efficiency across various business functions, strengthening AWS’ customer appeal. Amazon shares have risen more than 50% over the past year, outpacing the S&P 500’s 25.2%. If the company can continue to invest where it matters most, this is a stock that could have even more upside from here.
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