The "Magnificent Seven" is a group of stocks that make up the largest companies in the world. Their success has been a hallmark in the market for the past few years, but I'm not bullish on every single one of them right now. This group consists of:
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL)
Of those seven stocks, I'm only bullish on five of them. So, which ones are buys and which are sells? Let's take a look and find out.
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Two stocks in this group I'm passing on are Apple and Tesla. The reason is simple: valuation. These two are some of the most expensively valued stocks in the group, and I can't justify paying up for them.
Tesla is very expensive because the market is pricing it stock as an AI, robotics, and energy company rather than as an automaker, even though nearly all of its revenue is auto sales related. Remove it from the list, and you can better see how expensive Apple is as well.
Apple doesn't have any major headwinds in its business, and it's not growing incredibly fast, so it's just an expensive stock. It could have some rising headwinds, as AI demand is pushing prices of computing commodities (like memory chips) higher, which could lower margins and eat into Apple's profits, pushing the valuation even higher.
These two aren't the most attractive buys right now, and the other five look far better.
That leaves Nvidia, Alphabet, Amazon, Microsoft, and Meta Platforms as smart buys. These five are also the cheapest of the group and are doing much better (in terms of revenue growth) than the other two. Nvidia's jaw-dropping 85% year-over-year growth rate skews this chart, so I've removed it, but don't forget that when it comes to revenue growth, Nvidia is king.
Meta comes in with the next-highest growth rate, followed by Alphabet, Microsoft, and Amazon, just barely edging out Apple. However, I believe Amazon's growth rate could accelerate over the next few years as its major investment in cloud computing resources comes to life. CEO Andy Jassy has already informed investors that the company has clients lined up to use the $200 billion in new computing capacity, which will lead to explosive growth for Amazon. Likewise, Microsoft and Alphabet are spending big on AI computing capacity to expand their computing footprints, and their revenue growth rates should accelerate over the next few years as well.
Source: Yahoo Finance Top News — This article was automatically imported from the source. Read full article at original source →
