Amazon looks cheap against its expected long-term earnings growth if that growth proves accurate. Its five-year consensus growth is the fastest in the Magnificent 7 after Nvidia, while its 0.90 forward P/E-to-growth ratio is the lowest excluding Nvidia. x.com  x.com 

Meta's core advertising business is significantly outgrowing its biggest competitors even before factoring in the newer businesses it is building. Q3 ad revenue rose 26% year over year, versus 10.6% at Alphabet and 10.9% at Amazon. Back at 19x forward earnings, Meta is the most undervalued Magnificent Seven stock. x.com  x.com 

The Magnificent Seven are set to underperform other parts of tech as buybacks shrink and capex rises. Per Goldman Sachs, consensus sees hyperscaler capex of $755B in 2026, up 83% and reaching 100% of operating cash flow; Q1 buybacks fell 64% year over year, and shareholder returns now take 20% of spending versus 34% in 2017-2022. Nvidia has already underperformed and may be owed some catch-up, but its huge valuation makes its old growth rate hard to sustain. x.com  x.com 

The S&P 500 rally is a concentration bet because earnings growth is coming from very few companies, while AI productivity gains are not spreading across the broader economy. Nvidia and Micron drive 34% of expected Q3 earnings growth, and ten companies account for two-thirds. Apollo's revenue-per-worker chart shows gains for the Magnificent Seven but little for the other 493 S&P 500 companies; most stocks that reflect the broader economy are down. x.com  x.com  x.com 

Low forward earnings multiples across eleven stocks cannot persist indefinitely. Nvidia trades near 17.5x, its lowest in over a decade; Oracle near 15x, its lowest in six years. Uber is at 17x, Broadcom 19x, Vistra 15x, AppLovin 14.5x, TSMC 19x, Forgent Power Solutions 18x, Nokia 19.5x, American Express 17x and Western Digital 14x. x.com  x.com  x.com  x.com  x.com  x.com  x.com  x.com  x.com  x.com  x.com 

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.com 

Rapid revenue growth makes the capex bear case harder to justify for Microsoft, Alphabet, Meta and Amazon. Their latest cited growth rates are 18%, 23%, 28% and 16% in Q2, respectively; their scale does not seem to be slowing them as expected. x.com 

Apple has the most predictable cash flows, including future cash flows, and that dependability appears to be what investors reward. Its P/E is about 40 versus 27 for Nvidia, 22 for Meta and 16 for Alphabet; Meta's free cash flow has turned negative. Leveraged build-out companies have been hit hardest while Apple has outperformed, but Apple investors could be wrong and the point at which its premium becomes too high remains open. x.com  x.com  x.com 

Amazon, Alphabet, Microsoft and Meta are not getting cheap; their multiples are sliding because separate monopolies are turning into one competitive market. They now spend enormous sums to sell the same AI to the same customers, funded largely by cyclical ads, on unproven returns. Microsoft faces AI eating per-seat licensing, Amazon fights in both retail and cloud, Alphabet's search premium is gone, and Meta keeps going all in for less. Markets can't price not knowing what a business will be. … Show more

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.com