Mike
Investor, Creator of HiddenSmallCaps
Increasingly bearish sentiment on the Magnificent Seven likely makes this a great time to start buying. Hyperscalers will gradually raise pricing, and Amazon will integrate more of its own chips over time, which it has said could improve profit by tens of billions of dollars. Trainium 3 enters mass production in the second half, and Baker expects its 2026 position to resemble TPU's in 2025. x.comÂ
The Magnificent Seven are a great buy because the market is missing that their compute spending already earns a return. Alphabet, Amazon and Meta are the cheapest in years at about 20-25x forward earnings, as capex nearly doubled and Alphabet's buybacks fell from $15B a quarter to zero. Yet the group's revenue growth still beats the market. Compute either boosts their own products, as with Amazon and Meta ads, or can be rented out at higher prices. Steady buying this year should pay off in 2027. … Show more
Magnificent Seven leadership has returned because analysts keep raising the bar for those companies while trimming 2029 estimates elsewhere. x.comÂ
Magnificent Seven earnings next week are worth staying clear of, as price action and capex news have lowered expectations, though Apple might be OK. Amazon bounced off 225 in late June and took three weeks to reach 250, only to fail badly, and the reaction to Google's earnings showed Wall Street's mood. 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
Record-high positioning in hyperscalers and the Magnificent Seven could bring short-term weakness if the market trades against crowded holdings. The medium-term hyperscaler thesis still looks attractive, but the near-term positioning risk tempers it. 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's bull run is only starting, because investor sentiment is unusually bearish even as the group closes at all-time highs. AAII bearish sentiment is at its 2026 high, a level last seen in April, the same squeeze setup that preceded the prior run. For Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla, this is the time to increase market exposure, not cut it. x.com 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
Hyperscalers' forward P/E has contracted 20% even as estimates ramped, making it rare to see things get much worse. Rising GPU rents and new lows in availability make the AI fears a fade; hyperscalers should lead. The next two weeks will be gut-wrenching amid the OpenAI raise, Anthropic S-1, Fed, midterms and mutual-fund selling into year-end, but that is the time to buy. 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
