There are still buying opportunities despite the group’s AI-fueled run.
ChatGPT’s arrival in late 2022 kicked off the artificial intelligence (AI) bull market. The group of prominent technology stocks called the “Magnificent Seven” — Apple, Amazon (AMZN 0.91%), Alphabet (GOOG 0.86%) (GOOGL 0.89%), Meta Platforms (META 0.40%), Microsoft, Nvidia (NVDA -1.59%), and Tesla — make up a significant portion of the S&P 500.
Tremendous AI growth opportunities sent their share prices soaring and driven the broader market to new all-time highs.
While some Magnificent Seven stocks are too expensive to justify buying them today, others could have room to run. Here are the four that are still brilliant AI buys today:
1. Nvidia
AI models require powerful computing systems to process vast amounts of data. Nvidia’s AI chips have become the runaway leader for big technology companies building these systems.
The company’s H100 chip series powered the AI revolution’s early innings, and now Blackwell, its next-generation chip architecture, is set to be launched and could take AI to its next phase.
So far, Nvidia has held on to its dominant market position in AI, and there aren’t yet many indications that it will change.
Analysts believe Nvidia will end its fiscal year with $125 billion in revenue and grow that by 40% next year to $175 billion. That should fuel rampant earnings growth; analysts estimate earnings will increase by more than 41% annually for the next three to five years. The stock trades at a price-to-earnings ratio (P/E) of 41 times this year’s earnings estimates, arguably making Nvidia a bargain if its earnings grow anywhere near estimates.
2. Alphabet
Alphabet is already one of the world’s most influential companies, and AI is a case of the rich getting richer. The company possesses everything you need to unleash AI’s potential: deep pockets to build data centers, gobs of first-party data to train its models, and a dominant product to distribute its technology.
The company dominates internet search to the point that it was declared a monopoly, and now it is weaving AI features into search, YouTube, and throughout its business.
These enhancements should help this multitrillion-dollar company grow well into the future. Analysts believe Alphabet will raise earnings by an average of 17% annually over the long term.
Today, the stock trades at a forward P/E of just 21. That’s a bargain for a business growing profits this fast, plus investors are getting a wide-moat business that many would agree justifies a premium valuation. Alphabet’s quality and cheap valuation make it a table-pounding buy.
3. Meta Platforms
Meta Platforms has a lot in common with Alphabet. It’s virtually a cash-flow printing press that owns the computing, data, and distribution needed to become a force in AI over the coming years.
Meta is one of the largest companies with a founder as CEO, and Mark Zuckerberg is still barely 40 years old. His vision helped Meta become the de facto leader in worldwide social media via Facebook, Instagram, WhatsApp, and Threads, and he could still have decades ahead at the helm.
Zuckerberg strongly believes in AI as part of Meta’s future, so it could be the most AI-centric stock investors will find on the market. It has already woven AI into its digital ads business, and LLama, its large language model, into its social media apps.
The company was already growing via its ad business, but AI monetization could become a bigger story over time. Its price/earnings-to-growth ratio (PEG) of 1.4 indicates the stock is reasonably priced for what could be years of AI-driven growth. Analysts call for earnings increases averaging 19% annually over the long term.
4. Amazon
AI is improving the experience on Amazon’s e-commerce platform; for example, it summarizes product reviews to give consumers quick feedback on items they’re browsing. However, most of the company’s AI opportunities will come as part of Amazon Web Services (AWS), its cloud business.
Amazon is competing with other cloud providers like Microsoft to build the best platform for companies to deploy and manage AI applications. AWS is the world’s leading cloud platform, and integrating AI capabilities is a logical evolutionary step in growing and protecting that business.
As long as Amazon successfully competes, investors should be thrilled with the company’s long-term performance. Analysts believe it will grow earnings by 27% annually over the next three to five years.
Meanwhile, the stock trades at a forward P/E of 40. The company invests heavily in its business, which can skew earnings. The stock could be cheaper than it looks. If you value it on operating cash flow, it’s nearly the cheapest it has been in a decade despite trading near its all-time highs.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
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