Gustavo Neffa
Partner & Director at Research for Traders, Economist & Professor
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'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
Microsoft's position is the most crowded among the Magnificent Seven, and fund flows are against it as funds sell those stocks to reserve cash for Anthropic's IPO. It faded despite an excellent earnings report. 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
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
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 excluding Tesla are cheap because multiples fell more than prices while earnings growth accelerates. Ex-Tesla the group trades at 21.5x, with earnings expected to grow about 24% this year and 21% next; buying at 21x has averaged 29% 12-month returns. Unlike 2022, the Hormuz shock is narrower: severe forecasts see 4.1% inflation, and further hikes are questionable. If these stocks keep falling broadly on geopolitical uncertainty, it will be a generational opportunity. x.comÂ
The Magnificent Seven's capex-heavy effort has eviscerated their balance sheets, leaving them exposed if a new technology or competitive threat emerges. That one-two hit is the real risk. x.comÂ
Nvidia's robotics and autonomous-vehicle opportunities are not yet baked into its valuation. The stock looks super cheap here and ranks first among the Magnificent Seven for investment attractiveness. x.com x.comÂ