Evaluating Key Players: Top Magnificent 7 Stocks for 2025
- (0:35) – Which Magnificent 7 Stocks Should You Consider for Your 2025 Portfolio?
- (9:30) – Tracey’s Top Picks for the 2025 Watchlist
- (22:00) – Episode Roundup: GOOGL, AMZN, META
- Podcast@Zacks.com
Welcome to Episode #428 of the Zacks Market Edge Podcast.
Every week, host Tracey Ryniec, a Zacks stock strategist, discusses the latest trends in stocks, bonds, and ETFs and their impact on your investments. This week, Tracey takes a closer look at the Magnificent 7 stocks: Apple, NVIDIA, Alphabet, Meta Platforms, Amazon.com, Tesla, and Microsoft Corp.
From FAANG to the Magnificent 7
In previous years, a major group of large-cap stocks was known as FAANG, which later morphed into FANGMAN with the inclusion of Netflix. However, as Netflix was phased out and Tesla stepped in, the new ensemble became known as the Magnificent 7. Heading into 2025, these seven companies have evolved into the leaders in the stock market.
In 2024, the Magnificent 7 have outshined the S&P 500, with the Roundhill Magnificent 7 ETF (MAGS) reflecting a significant 69% increase year-to-date. Investors are now left wondering how much further these stocks can climb.
Not all the stocks in the Magnificent 7 exhibit the same financial metrics. While some are quite pricey—like Tesla with a forward P/E of 176—others present a more favorable valuation, such as Alphabet with a Price-to-Book ratio of 7.4.
Top 3 Magnificent 7 Stocks for 2025
1. Alphabet Inc. (GOOGL)
Alphabet Inc. stands out as the most affordable option within the Magnificent 7 based on its price-to-earnings (P/E) ratio, currently at 23.9. While not fitting the traditional definition of a “value” stock (P/E typically under 15), it remains cheaper compared to its rivals.
Year-to-date, Alphabet shares have increased by 39%, reaching new all-time highs. Earnings are projected to grow by 38.3% in 2024, followed by another increase of 11.1% in 2025. Alphabet’s robust revenue drivers include YouTube, which has brought in $50 billion over the past four quarters. Additionally, Alphabet now offers a dividend with a yield of 0.4.
2. Meta Platforms, Inc. (META)
In 2024, Meta Platforms has been somewhat overshadowed by NVIDIA; however, its shares are up 69% year-to-date, significantly outperforming the S&P 500 for the year.
Earnings projections are ambitious, expected to climb 52.5% in 2024 and another 11% in 2025. Even with this growth, Meta remains reasonably priced, marked by a forward P/E of 25.8 and a PEG ratio of 1.3. A PEG ratio below 1.0 indicates a strong balance between growth and value, making Meta’s current valuation appealing. The company has also started paying dividends, currently yielding 0.3%.
3. Amazon.com Inc. (AMZN)
Amazon is redefining itself from being merely the “everything store” to the “everything company,” which now includes its AWS division, Whole Foods, Prime sports and entertainment, and new ventures into chip manufacturing.
Amazon’s earnings are anticipated to soar by 79% in 2024 and an additional 20% in 2025. Despite this impressive growth, Amazon boasts the lowest price-to-sales (P/S) ratio among the Magnificent 7 at 3.8. While a P/S ratio under 1.0 is typically regarded as “value,” Amazon’s ratio is intriguing for a growth stock—especially when comparing to Microsoft’s 13.1 and NVIDIA’s 29, with ratios over 10 considered expensive.
Should these stocks make it to your shortlist for 2025?
Additional Insights on the Best Magnificent 7 Stocks for 2025
For comprehensive analysis, tune into this week’s podcast.
[Tracey holds shares of AMZN, MSFT, and GOOGL in her personal portfolio.]
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Amazon.com, Inc. (AMZN): Free Stock Analysis Report
Alphabet Inc. (GOOGL): Free Stock Analysis Report
Meta Platforms, Inc. (META): Free Stock Analysis Report
For more information, visit Zacks.com.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
