Simplifying Stocks, CPA
CPA, Creator of FinFluential Television
The Magnificent Seven's recent weakness is a prime buying opportunity, because S&P 500 tech earnings forecasts have kept surging despite the war. The group has shown serious resilience through volatility, and the broader tech sector keeps proving its strength. x.comÂ
The Magnificent Seven's growth, fortress balance sheets and central role in the AI buildout now come at multiples that finally make sense. They have barely bent when high-beta names lose 10% in a session; that resilience makes their valuations down here one of the better opportunities in this market. x.comÂ
The Magnificent Seven can be bought at no valuation premium to the other 493 S&P 500 stocks. x.comÂ
Tesla is the imposter in the Magnificent 7: a company with roughly 0% growth demanding about 400 times earnings. Even on forward estimates the P/E sits around 208, not the 73x cited by @des8253105, who blamed the trailing multiple on lost regulatory credits and tariff-related inventory writedowns. x.com x.com x.comÂ
Apple, Alphabet, Amazon, Nvidia, Meta and Microsoft are getting to the point of looking cheap, given their great free cash flows. x.comÂ
The Magnificent Seven will keep making investors rich and should consistently outperform the market, because they are super cheap relative to the S&P 500's P/E. The group covers Nvidia, Amazon, Apple, Microsoft, Tesla, Alphabet and Meta, along with the MAGS ETF that holds them. x.comÂ
Tesla trades at about 200x forward earnings, a bubble valuation that stands out against the rest of the Magnificent Seven, which per @DividendTalks now trade at 20-29x. x.comÂ
Microsoft, Nvidia and Meta are an opportunity because the Magnificent Seven now trade at their largest valuation discount to the S&P 500 in over a decade. Investors who complain about missing good prices should take advantage when the chance arises. x.comÂ
The alpha now lies in cheap Magnificent Seven stocks about to reap biblical returns from their capex, with Meta, Amazon and Nvidia the top three picks. x.com x.com x.comÂ
Magnificent Seven stocks face continued pressure as AI capex keeps eating their free cash flow with no sign of slowing, and the market is not rewarding the builders for now despite the returns. The recipients of that spending in power, grid, chips and materials, such as TSMC, GE Vernova, Micron and ASML, look better. Concern is greatest for Tesla and Meta, whose recent moves seem disconnected and whose AI showcase was embarrassing; Microsoft, Amazon, Apple and Alphabet are less concerning. x.comÂ
The Magnificent Seven look like a good long into earnings if the long-AI/short-Mag7 pair trade keeps unwinding, since Mag7 and software have been heavily shorted against AI names and may regain momentum. Google is the favorite. Nvidia and Apple are fundamentally preferred over Microsoft and Meta, but Microsoft and Meta offer better risk/reward here; Amazon rounds out the group. x.com x.com x.comÂ
