Market Turmoil Impacts “Magnificent Seven” Stocks Significantly

When you look up the word “magnificent,” you’ll find definitions like impressive, striking, or excellent. These terms capture what magnificence is about. However, they don’t reflect the current state of the so-called “Magnificent Seven” stocks. Recent tariff-related market sell-offs have resulted in all seven stocks in the group experiencing sharp declines, with six dropping over 20%.

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Nonetheless, don’t overlook the potential for these stocks to regain their impressive standing. Here are three struggling members of the Magnificent Seven that might be worth buying and holding.

1. Alphabet

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) seems well-positioned to navigate the current economic challenges. In 2024, the company generated $350 billion in revenue and reported profits exceeding $100 billion. Their cash reserves sit at approximately $96.7 billion.

Most of Alphabet’s revenue comes from Google Search and related applications. Although advertising revenue may dip during a recession, this core business is likely to remain resilient. I don’t believe that generative AI poses an existential threat to Google Search; rather, the recent integration of generative AI has led to greater search volume and enhanced user satisfaction.

Additionally, generative AI is likely to continue boosting Google Cloud, which is already the fastest-growing major cloud services provider. This segment is expected to become an increasingly vital profit generator for Alphabet.

Furthermore, Alphabet’s “other bets” should not be overlooked. The self-driving car venture, Waymo, holds significant promise, especially if the autonomous ride-hailing market develops as anticipated. Waymo could offer substantial benefits to Alphabet shareholders, whether it remains under the Alphabet umbrella or is spun off into a separate entity.

2. Amazon

Amazon (NASDAQ: AMZN) faces similar challenges as Alphabet. The company reported nearly $638 billion in revenue for 2024, with profits reaching $59.2 billion, and boasts a cash reserve exceeding $101 billion.

An economic downturn could adversely affect e-commerce sales. However, Profitero has consistently ranked Amazon as the most affordable online U.S. retailer for the past eight years, positioning it well for budget-conscious consumers.

Long-term, Amazon’s e-commerce segment is expected to grow and become increasingly profitable, leveraging technology to enhance operational efficiency. The company’s key growth driver remains Amazon Web Services (AWS), the world’s largest cloud services provider. The ongoing adoption of AI and the migration to the cloud should benefit AWS significantly.

Moreover, Amazon is expanding into healthcare, satellite broadband, and self-driving vehicle technologies, indicating strong future growth potential. The company will likely continue exploring new expansion areas, consistent with its innovative past.

3. Meta Platforms

Meta Platforms (NASDAQ: META) does not match Alphabet and Amazon in financials. Yet, the company’s predicted revenue for 2024 is $164.5 billion, with earnings of $62.4 billion and a cash reserve of $77.8 billion—solid figures nonetheless.

While a recession could cause a drop in advertising revenue for Meta, businesses will still need to market their products. The platform’s daily active user base of 3.35 billion across Facebook, Instagram, Messenger, and WhatsApp remains attractive to advertisers.

Furthermore, Meta is integrating AI into its social media apps to enhance monetization efforts. CEO Mark Zuckerberg forecasts that AI-driven business messaging will be a key pillar of Meta’s revenue structure.

Meta may also lead in the smart glasses market. Zuckerberg’s recent comments about glasses being an ideal AI device format suggest that their Ray-Ban AI glasses could pave the way for this venture.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Keith Speights has positions in Alphabet, Amazon, and Meta Platforms. The Motley Fool has positions in and recommends Alphabet, Amazon, and Meta Platforms. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.