Evaluating the “Magnificent Seven”: Which Stocks to Buy Now

The “Magnificent Seven” stocks have flourished as popular stock picks; however, many have experienced significant sell-offs in 2025. This decline raises questions about potential investment opportunities, prompting a closer look at their current valuations. While five remain appealing, I’m choosing to steer clear of two.

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Stocks to Avoid: Apple and Tesla

Currently, I wouldn’t recommend purchasing shares of Apple (NASDAQ: AAPL) or Tesla (NASDAQ: TSLA). Both companies are facing challenges that impact their stock appeal.

Apple has not introduced any groundbreaking products recently and has struggled to achieve meaningful revenue growth over the past three years. While it did surpass the trailing-12-month total from the fall of 2022 in the latest quarter, Wall Street analysts foresee only 4.6% and 8% revenue growth for FY 2025 and FY 2026, respectively. Additionally, Apple’s premium valuation stands out, as only Amazon and Tesla have higher forward price-to-earnings ratios, with Microsoft’s being comparable. Due to these factors, I am avoiding Apple.

Tesla faces brand reputation issues, closely related to CEO Elon Musk’s political involvement during President Trump’s administration. Regardless of individual opinions on Musk’s actions, the resultant backlash has frustrated some existing and potential customers. Until Tesla resolves its image issues, I will likely avoid investing in its stock.

The remaining five stocks worth considering are Nvidia (NASDAQ: NVDA), Microsoft (NASDAQ: MSFT), Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), Meta Platforms (NASDAQ: META), and Amazon (NASDAQ: AMZN), all of which present intriguing investment opportunities at their current prices.

AI’s Impact on Growth Potential

In the wake of the recent market pullback, these five stocks are down 15%-20% from their peak prices. Concurrently, they are trading near their relative valuation lows from the past three years.

GOOGL data by YCharts

GOOGL PE Ratio (Forward) data by YCharts

Among these contenders, Alphabet stands out as the most affordable, trading at 19 times forward earnings. This valuation is significantly lower than the S&P 500‘s (SNPINDEX: ^GSPC) forward P/E of 20.5. Projected above-average growth rates support Alphabet’s appeal as a compelling buy.

The other four stocks trade at premiums relative to the S&P 500, thus requiring strong growth forecasts to justify their values in my view.

Nvidia, while one of the pricier options, has analysts predicting a revenue increase of 57% in FY 2026, with an additional 23% growth projected for the following year. These figures significantly surpass the S&P 500’s average of 10%. Furthermore, CEO Jensen Huang anticipates a potential path to $1 trillion in data center revenue by 2028, which positions Nvidia’s current stock price as quite favorable.

Microsoft and Amazon, along with Alphabet, represent excellent investment opportunities owing to their stakes in cloud computing. As AI technologies need substantial computing power, many businesses are turning to cloud providers to meet their needs.

Amazon Web Services (AWS), Microsoft Azure, and Google Cloud are the leading providers, poised to benefit from significant market growth projected to expand the cloud computing sector from $752 billion in 2024 to $2.4 trillion by 2030. This monumental increase could thrust these stocks into outperforming territory.

Meta also remains an essential player after making significant investments in AI. The company employs AI technologies to sustain its market position in social media, where it generates nearly all revenue from advertising. Additionally, Meta’s Reality Labs division is exploring several promising projects. Its revenue is expected to increase by 15% in 2025 and 14% in 2026, making it a worthy addition for investors seeking market outperformance.

In summary, the “Magnificent Seven” stocks continue to hold relevance in today’s market landscape. However, it is crucial for investors to be discerning regarding which stocks to purchase. The recent market downturn presents a unique opportunity to acquire shares at discounted prices, and I am optimistic that several of these stocks will beat market averages over the next three to five years.

A Second Chance for Lucrative Investments

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• Nvidia: an investment of $1,000 when we first recommended it in 2009 would now yield $314,847!*
• Apple: if you had invested $1,000 in 2008, you’d have $41,848!*
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Currently, we are issuing “Double Down” alerts for three exceptional companies, and you may not see another opportunity like this anytime soon.

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*Stock Advisor returns as of March 24, 2025

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. Keithen Drury has positions in Alphabet, Amazon, Nvidia, and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

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