3 "Magnificent Seven" Stocks That Are Screaming Buys Right Now

The "Magnificent Seven" group of stocks has had quite a run over the past few years. This cohort describes some of the largest companies in the world that led the markets higher and will continue to maintain their leadership role moving forward. They are:

1. Nvidia
2. Apple
3. Microsoft
4. Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL)
5. Amazon (NASDAQ: AMZN)
6. Meta Platforms (NASDAQ: META)
7. Tesla

Of these seven, three are solid buys right now. I'm eying Amazon, Alphabet, and Meta Platforms, and I think investors would be well suited to examine this trio right now.

Alphabet and Meta Platforms are the cheapest stocks in the group

When analyzing this group, you have to balance growth with stock valuations. Nvidia is the fastest- growing of the group, thanks to the artificial intelligence (AI) arms race, but it's also one of the most expensive.

On the opposite end of the spectrum lie Alphabet and Meta, as these two are the cheapest of the group from a forward price-to-earnings (P/E) ratio.

NVDA PE Ratio (Forward) data by YCharts

With just that snippet of information, you might assume that Meta and Alphabet are two of the slowest growing as well, but that isn't the case.

From a revenue-growth standpoint, these two are in the middle of the pack. From an earnings-per-share (EPS) perspective, these two are near the top of the list. Whenever you find a company that trades at a lower price than its peers, yet is growing revenue and earnings faster than they are, you should pay attention, as these can be excellent investments to buy.

Meta and Alphabet historically traded at a discount because of their heavy reliance on advertising revenue. In Q3, 75% of Alphabet and 98% of Meta's revenue came from advertising. Advertising is known to be a cyclical business, rising and falling based on the economy's performance. Even though the economy is still doing well, investors don't give those two as much of a premium because they know that eventually, a downturn will come.

However, I don't think that's a reason to avoid it. Furthermore, with the broader market, measured by the S&P 500 trading at 24.6 times forward earnings (compared to Alphabet's 22.3 and Meta's 25.7), I think these two represent enough of a value that they are great buys.

Clearly, both are doing well right now, with Alphabet's revenue and EPS rising 15% and 37%, respectively. Meta is doing even better, with revenue increasing 19% and earnings rising 37%.

Each also has AI investments that are starting to come around, although they are relatively small parts of their business. I think Meta and Alphabet are great buys now, but so is Amazon.

Amazon's profits are surging

Amazon is not nearly as cheap as the other two; it trades for 41.9 times forward earnings. However, there are some logical reasons why Amazon has that high of a multiple.

First, Amazon is still improving its operating margins at a steady pace.

AMZN Operating Margin (Quarterly) data by YCharts

This improvement is happening for three reasons. First, CEO Andy Jassy has been laser-focused on cutting the fat from Amazon and has cut many unprofitable business segments. Second, higher-margin businesses like advertising and third-party seller services have grown faster than Amazon's lower-margin businesses (like its online stores) over the past few quarters. With these segments growing faster, Amazon's margins will naturally increase.

Last, Amazon Web Services (AWS), which accounts for 17% of sales yet 60% of operating profits, has seen its revenue reaccelerate thanks to AI demand. This growth isn't expected to slow down anytime soon and will further boost Amazon's profitability.

With Amazon's high-margin segments growing faster than its lower-margin ones, its profits will continue to rise much faster than its revenue. This effect was in full display in Q3, as Amazon's net sales increased 11%, yet its earnings per share rose 52%.

This trend will continue, justifying Amazon's expensive stock price in the future. As a result, I think Amazon is a top stock to buy in this group.

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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. Keithen Drury has positions in Alphabet, Amazon, Meta Platforms, and Tesla. 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.