The Magnificent Seven, as a whole, may still be great long-term bets, especially now that most of their members have fallen under enough pressure to see their valuation metrics compress. That said, the Mag Seven seem to be breaking apart, with three members in Apple (NASDAQ:AAPL | AAPL Price Prediction), Microsoft (NASDAQ:MSFT), and Meta Platforms (NASDAQ:META) sinking, while two have gone flat Nvidia (NASDAQ:NVDA) and Amazon (NASDAQ:AMZN), leaving Tesla (NASDAQ:TSLA) and Alphabet (NASDAQ:GOOGL) as the Mag Seven members that have been magnificent in recent months. At this juncture, analysts seem bullish on the broad basket of the seven names.
Of course, Nvidia and Amazon shares could certainly turn the tide and regain their magnificence before the quarter comes to a close. Still, for those seeking technical momentum, it’s hard to bet against Tesla and especially Alphabet. Whether the magnificence broadens out to the other five remains the big question for the year. Either way, it’s all about the Magnificent One or Two for now, as intense selling pressure and pockets of momentum co-exist within the tech sector.
In the meantime, AI still seems to be the star of the show. With Google Gemini gaining ground and analysts expecting more gains ahead from shares of Alphabet, perhaps the most magnificent performer has more magnificence up its sleeves. Any way you look at it, Alphabet stock still looks like a relative value play, especially when you consider Gemini’s ascent and the still-modest 29.5 times forward price-to-earnings (P/E) multiple.
As investors grow more selective of which AI stocks they choose to buy (storage is in, AI software is out), investors should be ready to roll with the punches. If the Mag Seven are destined to stay on the canvas, perhaps the top performers might be in a spot to pull further ahead, even if it means leaving the rest of the pack in the dust. But which of the Magnificent Two looks timelier right here? Let’s check in.
Alphabet
Shares of Alphabet may be up close to 64% in the past year, but the stock still seems far from expensive. With the $4 trillion market cap milestone in sight again, the race for that top spot might get a bit closer.
Nvidia isn’t all too far off and with shares stuck in a sideways channel, there might be a chance for Alphabet to be the world’s most valuable company. As Google improves Gemini while building intriguing applications on top of it, my guess is that the momentum behind the AI titan might not be so quick to reverse course.
It didn’t take long for the potentially disrupted (in search) to become a disruptor. As it does seek to disrupt new markets with Gemini, I’d continue to stick with the name.
I think Alphabet will, in due time, surpass Nvidia, especially as opportunities like robotaxis, agentic commerce, the AI partnership with Apple, and greater personal context (think access to Gmail, photos, and the broad basket of Google apps) look to pay off in a big way. And, of course, TPUs could allow Google to nibble away at the market share of the GPU giants like Nvidia.
Any way you look at it, there are way too many drivers here, many of which are heavily discounted by analysts, at least in my view.
Tesla
Tesla stock has been choppily marching higher in the past six months, rising more than 47% over the timespan. It’s been one of the more magnificent of the Mag Seven over the last half of a year. But a breakout to new highs could be tough to achieve, especially given the hefty valuation (311 times trailing P/E).
Personally, Tesla stock is too expensive and volatile to consider backing up the Cybertruck. That said, the Elon Musk premium has clearly been worth paying for long-term investors who’ve looked beyond valuation to the growth opportunity to be had.
With Full Self Driving (FSD) subscriptions, a robotaxi rollout, and an Optimus robotics boom that could kick off in 2027, perhaps there is a huge wave of growth that warrants the premium price tag.
Of course, there’s also execution and timing risk here. So, the road ahead could be full of potholes and roadbumps, so do be ready to fasten your seatbelts with the name. Between Tesla and Alphabet, I’d have to go with the latter based on valuation and greater predictability. I also see Google as having a wider moat.
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