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2 Bargain "Magnificent Seven" Stocks to Ride the AI Investing Wave

2 Bargain "Magnificent Seven" Stocks to Ride the AI Investing Wave

  • 16.03.2025 16:25
  • msn.com
  • Keywords: AI, Stock Market

Alphabet and Meta are leading tech companies focusing on AI, currently trading at lower valuations despite their potential for growth in the AI market. Investors can capitalize on their undervalued status as they continue to innovate and expand in this high-growth sector.

Alphabet ServicesAlphabet NewsMeta ProductsMeta ServicesMicrosoft ProductsMicrosoft ServicesAlphabet ProductsNvidia ProductsMeta NewsApple ProductsApple ServicesTesla ServicesNDAQsentiment_satisfiedGOOGLsentiment_satisfiedAMZNsentiment_satisfiedAAPLsentiment_satisfiedMETAsentiment_satisfiedMSFTsentiment_satisfiedNVDAsentiment_satisfiedTSLAsentiment_satisfied

Estimated market influence

Nasdaq

Nasdaq

Positivesentiment_satisfied
Analyst rating: Buy

The Nasdaq index has seen gains and declines due to the performance of the Magnificent Seven stocks.

Alphabet

Alphabet

Positivesentiment_satisfied
Analyst rating: Buy

Alphabet is a key player in AI, providing infrastructure and services that have led to revenue growth.

Amazon

Amazon

Positivesentiment_satisfied
Analyst rating: Strong buy

Part of the Magnificent Seven leading gains in Nasdaq.

Apple

Apple

Positivesentiment_satisfied
Analyst rating: Buy

Part of the Magnificent Seven leading gains in Nasdaq.

Meta Platforms

Meta Platforms

Positivesentiment_satisfied
Analyst rating: Strong buy

Investing heavily in AI, with potential for new products and services.

Microsoft

Microsoft

Positivesentiment_satisfied
Analyst rating: Strong buy

Part of the Magnificent Seven leading gains in Nasdaq.

Nvidia

Nvidia

Positivesentiment_satisfied
Analyst rating: Strong buy

Part of the Magnificent Seven leading gains in Nasdaq.

Tesla

Tesla

Positivesentiment_satisfied
Analyst rating: Neutral

Part of the Magnificent Seven leading gains in Nasdaq.

Context

Analysis of "Magnificent Seven" Stocks: Business Insights and Market Implications

Overview

  • The "Magnificent Seven" tech stocks (Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, Tesla) have driven significant gains on the Nasdaq over the past two years.
  • These companies are leveraging their strengths in artificial intelligence (AI), a market projected to exceed $1 trillion by the end of the decade.

Market Trends

  • The AI boom has led to strong performance from these tech giants but has also caused concerns about U.S. economic effects, leading to share price declines.
  • The Nasdaq is currently in correction territory, with Magnificent Seven stocks underperforming compared to a few weeks ago.

Meta Platforms (NASDAQ: META)

Key Facts and Data

  • Investment in AI: Meta is investing heavily in AI systems, including its AI assistant across social media platforms.
  • Capital Spending: Projected capital spending of up to $65 billion in 2023, including a massive data center project.
  • Monetization Strategy: Aims to create AI assistants for all users, potentially increasing user engagement and ad revenue.
  • Valuation: Trading at 23x forward earnings, down from 29x a few weeks ago, making it undervalued.

Business Impact

  • Meta's focus on AI could lead to new products and services, enhancing its competitive position in the tech sector.
  • The company's ability to monetize AI will be critical for long-term growth.

Alphabet (NASDAQ: GOOGL)

Key Facts and Data

  • AI Infrastructure: Alphabet provides a "full-stack" AI platform, including data centers and products/services for customers developing AI solutions.
  • Compute Capacity Growth: Customer compute capacity has increased by more than 8x over 18 months for key AI tasks (training and inferencing).
  • Revenue Growth: Generating strong revenue growth through AI product和服务 sales.
  • Valuation: Trading at 18x forward earnings, the cheapest among the Magnificent Seven.

Business Impact

  • Alphabet's dominance in AI infrastructure positions it as a key player in the AI market, with immediate revenue opportunities and long-term growth potential.
  • Internal use of AI tools (e.g., Google Search) further enhances its competitive edge.

Market Implications

  • AI Growth Potential: The $1 trillion AI market presents significant opportunities for tech companies investing in AI infrastructure.
  • Valuation Attractiveness: Both Meta and Alphabet are undervalued compared to recent highs, making them attractive investment options.
  • Competitive Dynamics: These companies face competition from other tech giants but maintain strong positions due to their scale and innovation.

Strategic Considerations

  • Investment in AI Infrastructure: Companies like Meta and Alphabet are building for the future by investing heavily in AI capabilities.
  • Monetization Strategies: The ability to turn AI investments into revenue streams will be key to sustained growth.
  • Long-Term Effects: The impact of AI on these companies' products, services, and markets is expected to be transformative over the next decade.

Investment Considerations

  • Both Meta and Alphabet offer attractive valuations with strong growth potential in the AI-driven tech sector.
  • Investors should monitor regulatory developments and economic conditions that may impact these companies' performance.