In 2023, Wall Street analyst Michael Hartnett nicknamed a group of America’s largest companies the “Magnificent Seven” because of their dominance in various sectors of the technology industry and their tendency to grow revenue and earnings faster than the rest of the market. The companies are (in no particular order):
Nvidia
Apple
Alphabet(NASDAQ: GOOGL )(NASDAQ: GOOG)
Microsoft
Amazon(NASDAQ: AMZN )
Meta Platforms
Tesla
The Magnificent Seven have consistently delivered higher returns than the rest of the stock market, but they are currently experiencing a rare period of underperformance. The Nasdaq-100 The index is down 4.8 percent so far in 2026 due to ongoing geopolitical tensions in the Middle East, while the average Magnificent Seven stock has suffered a sharp decline of 11.5 percent year-to-date.
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High growth stocks experience more volatility during times of uncertainty, but this also creates buying opportunities. There’s a legitimate case for owning each of the Magnificent Seven stocks, but I’d like to highlight Amazon and Alphabet, which look particularly attractive right now. Investors willing to invest $500 can take one share in each company; Here’s why it can be a smart move.
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Amazon was a pioneer of the e-commerce industry in the late 1990s, and the Amazon.com retail platform is still its largest source of revenue. However, the company has leveraged its success over the past 20 years to enter other markets such as streaming, digital advertising and cloud computing. The expansion is paying off, especially in the cloud industry, where Amazon Web Services (AWS) is now the undisputed leader.
AWS offers hundreds of solutions to help businesses thrive in the digital age, from simple data storage to complex software development tools, but the platform has also become central to Amazon’s artificial intelligence (AI) strategy. AWS now operates hundreds of specialized data centers around the world, and it leases computing capacity to businesses so they can develop and deploy AI software.
These data centers are equipped with specialized AI chips from suppliers such as Nvidia, but Amazon has also designed its own. Its latest Trainium2 chip offers 40% better value performance than competing hardware, and Trainium3, which just launched, offers a further improvement of 40%. Amazon ended 2025 with a $244 billion order backlog for computing capacity from its cloud customers, and designing its own chips in-house will help the company bring data centers online much faster than relying on third-party suppliers.
AWS generated $128.7 billion in total revenue in 2025, and its fourth-quarter growth rate of 24% was the fastest since the third quarter of 2022, highlighting the platform’s incredible AI-driven momentum. AWS is also Amazon’s most profitable business unit, accounting for more than half of the company’s operating income in 2025.
While Amazon stock is down 9% in 2026, it’s also down 17% from last year’s record high. It now trades at a price-to-earnings (P/E) ratio of just 29.2, which is close to the cheapest level since it went public nearly 30 years ago. In my view, this presents a very attractive entry point to long-term investors.
Data by YCharts.
Alphabet is the parent company of Google, YouTube, Waymo, DeepMind, and more. It is Amazon’s biggest competitor in the cloud space through its Google Cloud Platform, which offers many of the same services as AWS.
Google Cloud is one of Nvidia’s biggest data center customers, but Alphabet has also designed its own chips, called Tensor Processing Units (TPUs), that are more specialized for AI workloads than traditional graphics processing units (GPUs). In fact, Alphabet used its latest Ironwood TPUs to train the Gemini 3 family of large language models (LLMs), which are among the most powerful in the AI industry.
More than 120,000 enterprises around the world tap into Gemini models via Google Cloud, which they use as the basis for their own custom AI software. This is important because the more AI applications companies build on Gemini, the more tokens they consume, and the more money Google Cloud makes.
Cloud platforms generate a record $58.8 billion in revenue by 2025. Its revenue growth accelerated in each of the last three quarters, and came in at a whopping 48% in the final quarter of the year.
But Google search, which remains Alphabet’s biggest source of revenue, is also expected to grow sharply by the end of 2025. New features such as AI Overview and AI Mode blend the traditional internet search experience with the power of AI, giving users much faster access to information. As a result, Alphabet is experiencing more usage than ever before with Google Search, which is attracting more advertisers.
Alphabet stock is trading at a P/E ratio of 27.2 as I write this, so it’s not only cheaper than Amazon, but also cheaper than the Nasdaq-100 Technology Index, which has a P/E of 29.3. The current stock market sell-off may be providing an excellent entry point for long-term investors.
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Anthony Di Pizio has no positions in any of the stocks mentioned. The Motley Fool has positions and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla and is short Apple shares. Motley Fool has a disclosure policy.
Take Sale-Off: 2 “Magnificent Seven” Stocks to Buy for $500 and Hold Forever was originally published by The Motley Fool.
