The Magnificent Seven stocks have carried major indices to all-time highs. Some of these stocks were also in the FAANG acronym, but regardless of how you group them, mega-cap big tech companies continue to lead the market.
A new ETF that only holds Magnificent Seven stocks underscores how much these stocks propel the S&P 500 and Nasdaq Composite to new heights. The Roundhill Magnificent Seven ETF (NASDAQ:MAGS) has gained 31% year-to-date, which is a higher gain than both indices. This fund readjusts its holdings each quarter to ensure an equal weight among the Magnificent Seven stocks.
Some investors continue to invest in Magnificent Seven stocks, while others look for the next big opportunities. It’s possible to find stocks that outperform the Magnificent Seven stocks and can keep it up for several years. Investors may want to start their search with these three rising stocks that look poised to keep up with the Magnificent Seven.
Broadcom (AVGO)
Broadcom (NASDAQ:AVGO) has outperformed the stock market for several years and looks like it can become a member of the Magnificent Seven in the future. The semiconductor firm is up 35.6% year to date and soared 398% over the past five years. Broadcom also offers a 1.33% yield at current levels.
Artificial intelligence has been a driving force for many chipmakers, and it boosted Broadcom’s results in the second quarter. Revenue increased by 43% year-over-year to reach $12.5 billion. The company’s AI products reached a record $3.1 billion in sales in the quarter. Broadcom should continue to ride AI tailwinds to new heights, especially with the emerging OpenAI partnership.
The tech titan has a $704 billion market cap, which makes it realistic for the company’s valuation to exceed $1 trillion within the next one to two years. That would be a great development for investors, but Wall Street analysts aren’t waiting around. The stock is rated as a Strong Buy with a projected 29.8% upside from current levels and could be one of the future Magnificent Seven stocks.
CommVault Systems (CVLT)
CommVault Systems (NASDAQ:CVLT) is a cloud security company that has remained relatively under-the-radar compared to other cybersecurity stocks. While fewer people know about this company, its gains will get your attention. Shares are up by 52% year-to-date and have jumped by 145% over the past five years.
The stock trades at a reasonable 32 P/E ratio given its financial growth. CommVault Systems’ annual recurring revenue continues to increase, resulting in revenue acceleration over the past few quarters.
Revenue increased by 10% YoY in the fourth quarter of fiscal year 2024. Subscription revenue was a major highlight, jumping 27% higher compared to the same period last year. CommVault Systems made more than half of its revenue from subscriptions in the quarter. The company now has $770 million in total annual recurring revenue, which is up by 15% year-over-year.
Growth rates look like they will accelerate in subsequent quarters, but the current valuation does not fully reflect this likely outcome. Investors may want to keep CommVault Systems on their radars in case it becomes one of the future Magnificent Seven stocks.
ServiceNow (NOW)
ServiceNow (NYSE:NOW) has been off to a slow start with a 3.5% year-to-date gain, but the company’s 156% rally over the past five years demonstrates that it can keep up with the Magnificent Seven stocks. ServiceNow is a cloud platform that helps companies become more efficient. Its chatbots enable better customer experiences and help businesses manage their workflows.
The cloud platform delivered 24% YoY revenue growth in the first quarter, with almost all of its revenue coming from subscriptions. ServiceNow’s annual recurring revenue model suggests that it can continue to beat expectations and deliver long-term value for investors. The company exceeded its guidance across all Q1 top-line growth and profitability metrics. This success prompted the company to raise its midpoint for 2024 subscription revenue guidance.
ServiceNow also more than doubled its net income in the quarter. High annual contract values, including eight contracts worth more than $5 million per year, underpin the company’s growth. ServiceNow has more than 8,100 customers and a 98% renewal rate among them. The company also serves approximately 85% of the Fortune 500 companies. NOW could be one of the future Magnificent Seven stocks.
On this date of publication, Marc Guberti held long positions in AVGO, CVLT and NOW. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
