Key Points
The “Magnificent Seven” group of stocks leads the market. This group dominates the rankings of the world’s largest companies, with the smallest still ranking as the 11th-largest company. It’s made up of:
- Nvidia (NASDAQ: NVDA)
- Apple (NASDAQ: AAPL)
- Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL)
- Microsoft (NASDAQ: MSFT)
- Amazon (NASDAQ: AMZN)
- Meta Platforms (NASDAQ: META)
- Tesla (NASDAQ: TSLA)
All seven of these stocks have been major success stories, but their performance in 2026 has been mixed. The S&P 500 (SNPINDEX: ^GSPC) is up about 13% this year, and only two of the stocks are outperforming it: Amazon and Nvidia. That’s a pretty poor track record for what many consider to be seven market leaders.
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So, which of these are the best stocks to buy? Let’s take a look.
Image source: Getty Images.
The stocks I’m avoiding
First, let’s take a look at which stocks I am steering clear of: Apple, Meta Platforms, and Tesla.
Tesla is in an odd market position right now, with its EV sales struggling and profitability low. While I’m not bearish on the company, I don’t think it’s a smart buy right now.
Meta is in a similar boat, as its AI strategy appears to be changing every quarter. Furthermore, its latest quarter was an absolute dud, and the market is growing skeptical of the company. It needs a major turnaround to regain investor confidence, and I haven’t seen anything that makes me confident it can.
Apple makes the list because it’s facing rising memory chip prices, which could disrupt its current business model. Furthermore, Apple has a massive premium on its stock, and it just isn’t a good value.
That leaves Nvidia, Alphabet, Microsoft, and Amazon at the top, and there’s a common denominator for why.
These four are making big money from AI
All four companies are making a ton of money from the AI build-out, and for different reasons.
Nvidia is clearly the biggest beneficiary in this group of the AI budget, as it supplies GPUs and other equipment to support AI computing workloads. Nvidia is projected to grow rapidly for the remainder of this year and into next, creating a pretty easy bull case for the stock.
The other three may seem a bit more complicated, as each is spending hundreds of billions of dollars on AI computing infrastructure. However, each of them has a way to monetize it via cloud computing. Cloud computing involves bidding for excess computing capacity and then renting it back out to clients for a profit. All three companies are masters at doing this, and the results within their cloud divisions have been incredible.
These divisions are all growing faster than the broader company, which is helping push their stocks higher. I’d expect this trend to continue for the foreseeable future, especially because the investments they’re making in 2026 haven’t been monetized yet.
Another good reason to buy these stocks is that they’re all reasonably priced. (Note: Tesla has been removed from this chart because its forward price-to-earnings (P/E) ratio is 186).
NVDA PE Ratio (Forward) data by YCharts
All of the stocks fall in a comfortable valuation range, which is why I think they’re among the best buys in the Magnificent Seven now. I won’t be surprised to see the trend of underperforming the S&P 500 flip to finish out the remainder of the year, as there is plenty of upside for these four stocks to mount a comeback, even though Nvidia and Amazon are already outperforming the index.
Should you buy stock in Nvidia right now?
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Keithen Drury has positions in Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
