- The overall market (SPY) has recently recovered from a double-digit decline, now just 5.64% off its 52-week high.
- Alphabet leads the Magnificent Seven with the lowest current and forward P/E ratios despite a 15% drop from its peak.
- With the highest current P/E ratio, NVIDIA is set to report earnings soon, making it a pivotal stock to watch in the AI sector and for the overall market.
The recent market turbulence has left many investors and spectators on the sidelines, questioning whether now is the time to invest in some of the most prominent names in the stock market.
After a significant double-digit decline from its 52-week highs, the market (SPY) has shown signs of resilience with a robust four-day rally, reducing losses to just 5.64% from its peak. This begs the question: has this pullback created favorable buying opportunities for the Magnificent Seven stocks, or should investors remain cautious?
So, let's dive into each of the Magnificent Seven, ranking them from lowest to highest based on their current and forward P/E ratios.
Alphabet's Attractive Valuation: A Top Pick in Tech
Alphabet (NASDAQ:GOOGL), Google's parent company, trades with a current P/E ratio of 23.28 and a forward P/E of 18.7, positioning it as the top-ranked Magnificent Seven member based on P/E alone. The stock has fallen over 15% from its 52-week high but remains a favorite among analysts.
With a Moderate Buy rating based on thirty-five ratings and a price target forecasting more than 25% upside, Alphabet remains a compelling choice for investors in the technology sector.
Meta's Stock Resilience: What Investors Need to Know
Meta Platforms (NASDAQ:META), the parent company of Facebook, WhatsApp, and Instagram, ranks second with a current P/E of 26.34 and a forward P/E of 21.38. Meta has demonstrated impressive relative strength, trading just 4.95% below its all-time high despite recent market turbulence.
The company recently reported strong earnings on July 31, 2024, with EPS of $5.16, surpassing the consensus estimate of $4.70 by $0.46.
Meta also achieved revenue of $39.07 billion for the quarter, exceeding expectations of $38.26 billion and marking a 22.1% increase from the same quarter last year.
Apple's Valuation and Future Prospects: Investor Insights
Apple (NASDAQ:AAPL), the world's largest company with a market capitalization of $3.34 trillion, ranks third with a current P/E of 33.8 and a forward P/E of 29.18. Analysts maintain a bullish outlook on the stock, offering a Moderate Buy rating and a price target suggesting a nearly 8% potential upside.
However, recent developments have dampened the mood of Apple's shareholders. Warren Buffett's Berkshire Hathaway (NYSE:BRKa) significantly reduced its Apple holdings in a high-profile move. The sale of approximately 510 million shares, cutting Berkshire's stake by around 56%, has sparked speculation about Buffett's shifting sentiment toward Apple despite the stock's impressive performance over the past seven years.
Microsoft's Earnings Beat: What the Numbers Reveal
Microsoft (NASDAQ:MSFT), the world's second-largest company with a market capitalization of $3.02 trillion, has a current P/E of 35 and a forward P/E of 26.42. The stock holds a Moderate Buy rating from analysts, with a consensus price target forecasting a notable upside of over 21.6%. However, Microsoft has experienced a sharp decline recently, falling 13.14% from its 52-week high, a drop exacerbated by its latest earnings report.
Announced on July 30, 2024, Microsoft's quarterly earnings showed $2.95 per share, exceeding the consensus estimate of $2.90 by $0.05. The company's revenue reached $64.73 billion, slightly above analyst expectations of $64.38 billion, marking a 15.2% increase year-over-year. Although the company beat, its cloud miss overshadowed those results, resulting in a decline in the stock.
Amazon's Recent Earnings: A Mixed Bag for Investors
Amazon (NASDAQ:AMZN) has experienced a significant drop. Its stock is now 17.1% below its 52-week high and recent all-time high from early July, trading beneath its rising 200-day SMA. Amazon has a P/E ratio of 39.96 and a forward P/E of 28.45.
The company recently reported its second-quarter earnings, revealing weaker-than-expected revenue and issuing a disappointing forecast for the current period. Following the announcement, the stock fell as much as 6% in extended trading. Specifically, Amazon reported earnings of $1.26 per share, beating the expected $1.03, but its revenue of $147.98 billion fell short of the $148.56 billion forecast.
Tesla's Performance Struggles: A Closer Look
Tesla (NASDAQ:TSLA), ranking second to last in terms of P/E, has a current P/E of 55 and a forward P/E of 62. Tesla ranks last in share performance, with its stock down nearly 30% from its 52-week high. The company has encountered several challenges over the past year, including fluctuating electric vehicle demand and heightened competition.
Analyst sentiment reflects this uncertainty, with a Hold rating and a consensus price target closely aligned with the stock's current price, suggesting limited expected upside in the near term.
How NVIDIA's Growth Influences the Broader Market
NVIDIA (NASDAQ:NVDA)occupies the last spot regarding current P/E with a high ratio of 63, though its forward P/E paints a more optimistic picture at 29.06. The company has demonstrated impressive growth over recent quarters and is scheduled to report its earnings on August 28. This upcoming announcement is highly anticipated for NVIDIA and the broader market, given its pivotal role in AI and its significant presence in major market ETFs.