In 2025, the prominent “Magnificent Seven” stocks have experienced significant sell-offs, making their lower prices more appealing. However, analysts are cautious, suggesting that not all these stocks are advisable investments at the moment. Among these, five appear promising, while two are less appealing.
Apple (NASDAQ: AAPL) and Tesla (NASDAQ: TSLA) are currently facing challenges. Apple has not introduced any groundbreaking products lately, resulting in stagnated revenue growth over the past three years. Despite finally surpassing its trailing-12-month revenue from fall 2022 in the recent quarter, Wall Street forecasts only modest growth of 4.6% and 8% for fiscal years 2025 and 2026, respectively. Apple’s premium valuation further complicates its attractiveness, leading analysts to recommend avoiding it.
Tesla is dealing with brand issues linked to CEO Elon Musk’s previous involvement with President Donald Trump’s administration, causing dissatisfaction among some owners and potential buyers. Until Tesla addresses this brand image, it remains a less desirable stock option.
Conversely, five other stocks present intriguing opportunities, namely Nvidia (NASDAQ: NVDA), Microsoft (NASDAQ: MSFT), Alphabet (NASDAQ: GOOGL), Meta Platforms (NASDAQ: META), and Amazon (NASDAQ: AMZN). Following a recent market sell-off, these stocks have decreased by 15%-20% from their peaks, trading near their three-year valuation lows.
Alphabet emerges as the most economical choice, with a forward earnings valuation of 19 times, significantly lower than the S&P 500’s 20.5 forward P/E. Projected growth rates above the market average make Alphabet a compelling buy.
The other four stocks trade at a premium to the S&P 500, necessitating robust growth projections to justify this premium. Nvidia is notably expensive but expected to experience the most rapid growth, with analysts forecasting a 57% revenue increase in fiscal year 2026 and 23% the following year, far outpacing the S&P 500 average of 10%. CEO Jensen Huang has ambitious visions of achieving $1 trillion in data center revenue by 2028, suggesting today’s stock prices could be a bargain.
Microsoft and Amazon also present strong buying opportunities due to their cloud computing exposure. Cloud computing is set to benefit significantly from the AI boom, as companies lacking the computing power for AI models often rent it from cloud providers. Amazon Web Services (AWS), Microsoft’s Azure, and Google Cloud are leading providers poised to capitalize on the expanding cloud market, projected to surge from $752 billion in 2024 to $2.4 trillion in 2030, potentially delivering market-beating returns.
Meta Platforms has invested heavily in AI to maintain its dominance in social media, primarily generating revenue from ads. Additionally, its Reality Labs division is engaged in several promising projects, which could lead to new revenue streams. Even without these projects, Meta’s revenue is expected to grow by 15% in 2025 and 14% in 2026, making it an appealing stock for outperforming the market.
While the “Magnificent Seven” stocks remain relevant, discerning buyers should be selective. The recent market downturn offers an opportunity to acquire some of these stocks at reduced prices, with the potential for some of them to outperform the market in the coming years.
