The Magnificent Seven group may not last long. Nvidia (NASDAQ:NVDA) stock continues surging into orbit, while some underperforming members of the name struggle to stay in the green on a year-to-date basis — think Apple (NASDAQ:AAPL) and Tesla (NASDAQ:TSLA).
In a few months, we may very well have narrowed the group to the Magnificent One. Following a terrific showcase from Nvidia CEO Jensen Huang at this year’s GTC event, with a new line of Blackwell AI accelerators, it seems like the chip giant is, once again, ready to leave the rest of the market, including the Magnificent Seven, behind.
It’s easy to give up on some of the Magnificent Seven stocks that don’t have the ticker symbol of NVDA. However, value investors may be kicking themselves by not staying the course with the broader basket. With the exception of perhaps Tesla — electric vehicles are a tough place to be these days — I find the Magnificent Seven group is still a basket that represents the best of what this AI-driven market has to offer. Let’s check in with three that could be next in line to enjoy a big multi-year breakout.
Apple (AAPL)
Apple has been bombarded with a never-ending slew of mixed-to-negative headlines this year. And they don’t seem to be slowing down, either. The latest round of worrisome news involves the U.S. DOJ anti-trust lawsuit, which sent shares tumbling more than 1% on Wednesday’s after-hour trading session, wiping out most of the gains from the day.
This isn’t the first time Apple stock has run into roadblocks, while most other stocks in this market have been allowed to move higher. Apple stock is just unloved right now, and it’s unclear what can help propel its share price above those elusive highs just shy of $200 per share.
More AI uncertainty (could Apple really be teaming up with Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) on generative AI?) probably won’t help give AAPL stock the jolt it needs to break out. Its ongoing AI acquisition spree probably won’t move the needle much, either.
With its recent MM1 AI model quietly making headlines, I do think it’s too soon to axe Apple from your portfolio. My take? Allow Tim Cook and his company to reveal more about AI later this year rather than jumping off the slumping ride right now. If he says Apple will “break new ground” in the field later this year, I’d take his word for it.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) stock’s big breakout moment is so close that it’s almost palpable. The stock’s been spending more than a year posting explosive gains to comeback from its historic 2022 “off” year. With ambitious AI plans and the means to expand into the AI chip scene with the likes of Trainium (for training AI models) and Inferium (for inference), perhaps Amazon is an AI dark horse as it ramps up on efforts to ready Amazon Web Services (AWS) for the booming AI age.
With its Nvidia partnership and investment in Claude-owner Anthropic, there are many ways that Amazon can give its growth a shot in the arm as generative AI continues to be the go-to theme. CEO Andy Jassy thinks AI could bring forth “tens of billions of dollars” in sales in the next few years. Though Jassy’s reign has been a choppy one, it seems like new highs are finally in the cards as the cloud giant allows AI to bring growth into hyperdrive.
Oh, and let’s not forget about the e-commerce business, which is making huge strides to get customers what they want in the quickest and cheapest way possible.
Alphabet (GOOG, GOOGL)
Alphabet stock is another fine Magnificent Seven member about to wake up in a big way. Its early days with Gemini have been turbulent, to say the least. However, it’s becoming more apparent that Gemini is one of the large language models (LLMs) out there with the most potential.
Many are starting to come to this realization following the recent Bloomberg report (from accurate analyst Mark Gurman) that Apple may be “actively negotiating” with Google about the potential to bring Gemini to its devices. I have no idea if the day Apple brings Google’s AI to the iPhone will ever come. Regardless, I think the report shows us all that Gemini is no slouch in the AI scene. In fact, it’s a dominant AI model that may end up ruling them all.
In any case, Alphabet stock, like Apple and Amazon, is not too far from new highs. All it’ll take is one really big day for the stock to blast through its ceiling of resistance just north of around $150 per share. At an absurdly low (especially for a Magnificent Seven member!) 22.1 times forward price-to-earnings (P/E), I’d argue a GOOG stock breakout could bring it much higher than the other names mentioned in this piece.
On the date of publication, Joey Frenette owns shares of Amazon, Apple and Alphabet (Class C). The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
