The “Magnificent Seven” group of stocks has been the stock market leader for the past five or so years. In no particular order, they are:
Nvidia(NASDAQ: NVDA )
Apple(NASDAQ: AAPL )
Alphabet(NASDAQ: GOOG)(NASDAQ: GOOGL )
Microsoft(NASDAQ: MSFT )
Amazon(NASDAQ: AMZN )
Meta Platforms(NASDAQ: META )
Tesla(NASDAQ: TSLA )
All seven of these stocks are trillion dollar companies and are among the 10 largest companies in the world. These stocks together account for a significant portion of investment indices S&P 500 and Nasdaq Composite. So, their continued success plays a big role in the success of investors who buy stakes in funds that reflect these indexes.
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But of these seven, which is the best buy? Let’s take a look at these companies and rank them from worst to best as investment options.
Image source: Getty Images.
Tesla is at the bottom of this list, but that’s not a sign for investors to sell. Just because it’s not a best buy doesn’t mean it’s a sold one right away. The reality is, Tesla is working through some headwinds right now. The valuation of the stock is seriously out of balance. Given how high it is, many programs are still in development, including the robottaxi service and the humanoid robot division, which will need to start generating enough cash flow in the next decade to justify the price.
The best time to buy Tesla stock is when it is trading well at its all-time high. It is currently down about 20%, but regularly pulls back 50% or more before it finally recovers. I think waiting until the next big drop is a smart move, as the market has historically been hot and cold with Tesla’s stock.
Apple is this low on the list partly because of its ratings. Apple is one of the slowest-growing stocks on this list, even though its most recently reported quarter was its best in years. Despite this, it has the third-highest forward price-to-earnings ratio (behind Tesla and Amazon).
Data by YCharts.
Apple has been slow to develop innovative products that consumers demand, and it appears to be sitting on the sidelines during the increasingly important artificial intelligence (AI) arms race. Investors seem pessimistic about its future prospects, and so am I. I don’t think it’s a top stock to buy right now.
Although the alphabet is number 5 on this list, there is one huge Go between it and Apple. I consider any stock from here on out to be an excellent buy, and investors shouldn’t get too caught up in the personal level. Alphabet has come back from the dead and emerged as one of the top generative AI competitors and transformed its legacy Google search business by putting AI front and center.
That tells me everything I need to know about Alphabet’s prospects, and I think it’s a strong stock to consider buying now. But with its relatively high valuation (29 times forward earnings), it’s not as timely a buy as others.
Amazon may be more expensive at 32 times forward earnings, but I think investors aren’t correctly pricing in the huge upside of its AWS business. Azure and Google Cloud were early movers in building AI computing capacity, but AWS has now caught up to the trend and is seeing growth, particularly in its custom AI chip division.
This could lead to strong upcoming growth, and I think Amazon will surprise a lot of investors over the next few years.
Meta Platforms is the cheapest stock in the group, trading for 22 times forward earnings. For context, the S&P 500 trades at 20.3 times forward earnings, so it’s close to the broader market average despite strong growth. Meta’s social media dominance has given it incredible pricing power in its advertising divisions, leading to strong growth. I don’t see that slowing down anytime soon, making today’s slightly above-average valuation a great buying opportunity.
If one of Meta’s AI investments pans out, the stock could go even higher — something that stock doesn’t have a price for.
Nvidia didn’t secure the top spot in this group, but it was close. No company on this list is growing faster than Nvidia – it’s in a league of its own.
Data by YCharts.
Moreover, Wall Street analysts expect its revenue growth to accelerate throughout calendar year 2026, with growth of 79% in Q1 of fiscal 2027 and 85% in fiscal Q2. If Nvidia can maintain these growth rates this year and into calendar 2027, then today’s 23.9 times forward earnings looks like an absolute steal.
Microsoft tops the list of Magnificent Seven stocks to buy right now, and that’s mostly because of valuation. While it’s not the cheapest stock from a forward income standpoint (24.6x), it was used. Microsoft has lost its premium despite posting solid results. It now trades at its lowest prices in the last decade when trailing earnings are used.
Data by YCharts.
You don’t get many opportunities like this with Microsoft stock, and investors need to take advantage of the low price right now, because it doesn’t come around often.
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Keith Drury holds positions at Alphabet, Amazon, Meta Platform, Microsoft, Nvidia and Tesla. 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.
I found the “Magnificent Seven” Stocks Best to Worst Buys Right Now originally published by The Motley Fool.
