Analyst Dubs the ‘Magnificent Seven’
In a market spotlighted by cutting-edge technology, Bank of America analyst Michael Hartnett has christened a formidable group of U.S. tech giants as the “Magnificent 7” or ‘Mag 7.’ This elite lineup features Apple (AAPL), Meta Platforms (META), Amazon (AMZN), Microsoft (MSFT), Nvidia (NVDA), Alphabet (GOOGL), and Tesla (TSLA).
These groundbreaking companies have been pivotal in the recent market upswing, capitalizing on trends in cloud computing, AI, EVs, digital advertising, and more. Widely acknowledged as tech vanguards, they wield significant influence in the industry. However, focusing on the ‘Magnificent Six,’ D.A. Davidson managing director Gil Luria foresees enduring dominance through forthcoming AI waves. These tech juggernauts, excluding Tesla, stand poised to lead the tech sphere’s trajectory in AI and computing.
Meta Platforms and Alphabet’s Prominence
Luria shines a spotlight on Meta Platforms, assigning a ‘buy’ rating with a $600 price target. Meta Platforms boasts a suite of popular social media channels propelling its daily user count to around 3.2 billion. Wall Street echoes Luria’s sentiment with a ‘strong buy’ consensus, as 38 out of 44 analysts vouch for the same.
Delving deeper, Meta’s revenue sources primarily stem from its social media platforms, showing a notable 22% surge in the Family of Apps segment during the second quarter. Encouragingly, the Reality Labs segment thrived by 27.9%, driven by AI-infused Quest headsets. With an eye on AI, Meta’s augmented reality and virtual reality avenues are poised for substantial growth.
On the other hand, Alphabet, spearheaded by Google’s innovative products, sits under Luria’s radar with a ‘neutral’ rating and a $170 target price. Enjoying a ‘strong buy’ rating overall, Google Cloud and Search, pivotal to Alphabet’s growth, contributed notably to a revenue surge in the second quarter. Alphabet’s strategic AI integration across its core products has led to impressive growth streaks recently.
The Analyst’s Caution on Tesla
While Tesla embodies the essence of scale, reach, and capital, Luria maintains doubts over its tech pedigree. Citing its primary revenue source as automobiles, Tesla lags in the tech aspect according to Luria, signaling a divergence from the Mag 6 list. Despite Tesla’s forays into solar power and automation, setbacks in its core automobile business remain a concern.
In the face of dwindling revenues and intensified competition in the EV industry, Tesla grapples with a 7% revenue dip in the automobile segment, painting a challenging picture. While holding onto a ‘hold’ status on Wall Street, Tesla’s stock price has surpassed its average target, projecting a potential 34.8% climb in the next year.
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On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
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