The Magnificent 7 stocks were in a league just over a year ago. Nowadays, the group has fallen through, with many folks narrowing down the exclusive basket to six, now five or four. At this pace, we may be left with just one Magnificent stock standing as Meta Platforms (NASDAQ:META) continues its epic rally on the back of the AI boom.
Let’s not be so quick to give up on the companies within the group that have lost their way. Long-term investors should be willing to give them at least a few years (let’s say three) to let them pick up traction again.
Remember, we should not look to the past year of magnificence when picking individual names from the cohort. Instead, we should look to the stocks we think could be most magnificent over the next year or two, regardless of how they’ve fared in the past quarter or year. Here are three that I think are equipped for a magnificent rest of 2024.
Meta Platforms (META)
Meta Platforms is showing no signs of losing its luster. The stock has added more than 52% in year-to-date gains to its impressive past-year surge. Even at new highs of $527 and change, I still find META stock incredibly cheap relative to its AI- and metaverse-powered growth prospects.
At writing, shares of Meta Platforms trade at 26.3 times forward price-to-earnings (P/E), not fitting my definition of an expensive stock, especially for a firm leveraging generative AI more effectively than most in its industry.
Looking ahead, AI could easily continue paving the way for new highs. As more people purchase their first virtual reality headsets, perhaps Meta’s metaverse may begin to be seen as a source of strength rather than an expense builder. In any case, I wouldn’t give up on the stock here. It’s still cheap at new highs, in my books.
Apple (AAPL)
Apple (NASDAQ:AAPL) is one of the Magnificent Seven companies that some critics may think should be removed from the group. I’m not one of them. The company is still innovating, perhaps at a much faster pace than investors believe.
As Apple Vision Pro launches into new markets later this year, while the firm looks to finally reveal some of the finer details of its AI ambitions, perhaps it’s too soon to shed your portfolio of AAPL stock. A recent Bloomberg report suggested that Apple is looking into creating home robots after ditching its Apple Car plans.
That’s an intriguing report, but not everybody’s convinced by the potential of robots to fuel growth for the tech giant. Dan Ives of Wedbush stated such a move would be a “black eye moment” for Apple. Harsh words. But I think he’s right in that Apple should be emphasizing AI more than experimenting with new hardware concepts.
Tesla (TSLA)
Tesla (NASDAQ:TSLA) stock was the first out of the Magnificent Seven group. But whether it can work its way back in is another question entirely. I think it can, especially as Elon Musk looks to prove to the world that Tesla is not just an automobile company but a tech company on the cusp of disrupting big markets with its innovations.
Ark Invest’s Cathie Wood is a Tesla believer, having picked up TSLA stock numerous times in recent months. A robotaxi event scheduled for August 8 will be a pivotal moment for Musk and the future of his electric vehicle (EV) empire as it looks to reverse course after a horrid past two years.
Now down 60%, I have to say shares seem a tad too oversold, especially for those who believe that Tesla has a front-row seat to the full self-driving revolution. In short, Tesla isn’t magnificent right now. But come August, I think it could prove its doubters wrong.
On the date of publication, Joey Frenette owned shares of Apple. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
