The so-called “Magnificent 7” are a group of mega-cap tech stocks that have absolutely dominated the markets in recent years. Investors who remained loyal to these stocks through thick and thin have beaten the market by a wide margin. Unsurprisingly, many investors are willing to let this trade ride.
However, large-cap stocks can see their growth rates deteriorate. Additionally, leadership shifts in specific sectors. Thus, taking a look at stocks outside of the largest possible players in specific industries can lead to outsized performance. The three stocks on this list each are massive in their own right.
So, let’s discover stocks that could provide outsized performance relative to the Magnificent 7 over the next five to 10 years.
Berkshire Hathaway (BRK-B)
Berkshire Hathaway (NYSE:BRK-B), Warren Buffett’s investment firm, is edging closer to the trillion-dollar mark. Its current market cap is at $777.9 billion. For investors looking for the best-quality, large-cap stocks, Berkshire ought to be leading your list.
This stock provides positioning as we head into economic uncertainty. Berkshire Hathaway has a massive cash hoard, with more than $150 billion in cash and U.S. Treasury Bills. The company’s $341.1 billion in equity and fixed-maturity securities rivals the largest conglomerates out there. Further, BRK-B is filled with defensive names with plenty of growth upside.
Buffett’s approach to long-term investing really stands out as the key investing thesis for owning this stock. Berkshire is among the few massive conglomerates actively-focused on capital preservation, something that really matters in downturns. And with plenty of dry powder on the sidelines, if a massive correction does take place, this is the company with the cash flow and ability to step in and scoop up incredible bargains.
Advanced Micro Devices (AMD)
Advanced Micro Devices (NASDAQ:AMD) is among the notable chipmakers that has seen consistent upside during this recent rally. The company’s MI300x GPU chipset has targeted Nvidia’s (NASDAQ:NVDA) lead and their A100 and H100 chips.
AMD has plenty of innovation spurring impressive long-term growth expectations. Investors betting on AMD may be placing a bet that this sector could become a two-horse race in terms of high-performance computing chips. In the AI realm, AMD is projecting $2 billion in AI chip sales for the year. While that’s far from Nvidia’s expectations, it does suggest AMD could build som substantial market traction. And this could fuel a continued rally in the stock.
Now, the company’s valuation is considerable, with investors forced to swallow a price-sales ratio of more than 11-times. Yet, if this company is able to grow according to plan, this multiple will come down to more reasonable levels over time.
Therefore, AMD is likely the most speculative pick on this list. But given its traction in key high-growth markets, long-term growth investors need to consider this name, even over Nvidia.
Shopify (SHOP)
Shopify (NYSE:SHOP) stock has demonstrated strong momentum, nearly doubling over the past year as well. Of course, this rally comes following a 2022 plunge. There’s plenty of upside to be had if Shopify approaches its previous all-time highs.
Of course, macro conditions need to improve for this to happen. But on a fundamentals basis, Shopify continues to sport strong numbers. In the company’s third quarter, SHOP reported a 25% year-over-year (YOY) revenue increase to $1.7 billion. Also, growing merchant participation contributed to a 29% surge in subscription revenue to $486 million.
In 2024, the company is expected to exhibit robust strength, as this growth continues. And, if Shopify continues to beat earnings expectations, expect plenty of upside.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
