Magnificent 7 Stocks Primed for Growth Post-Price Correction

Big Tech companies mirror U.S. hegemony. Just as America dominates the global stage with the U.S. dollar as the world’s reserve currency, backed by its military might, Big Tech companies similarly dominate their respective markets. In fact, the global web of alliances, influence, and narrative control would be exceedingly difficult to maintain without the infrastructure and reach of Big Tech.

Both the network effect and the need for centralized control have solidified these companies as extensions of U.S. hegemony. Meta CEO Mark Zuckerberg briefly highlighted this reality when he apologized for colluding with USG to implement narrative control, effectively curtailing First Amendment rights in the process.

For retail investors, this dynamic translates into exposure to companies with durable competitive advantages and stable cash flows. Big Tech’s access to Big Data alone makes it extremely difficult for newcomers to gain a foothold in their markets.

Over the last few years, Big Tech expanded into “Magnificent Seven”, courtesy of Nvidia (NASDAQ:NVDA) and Tesla (NASDAQ:TSLA). But which of these blue chips are worth exposure at this point in time?

Magnificent Seven Performance

Traditionally, Big Tech holds five companies: Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Meta Platforms (NASDAQ:META) and Microsoft (NASDAQ:MSFT). The AI hype and full self-driving (FSD) speculation has pushed Nvidia (NVDA) and Tesla (TSLA) into the mix.

Bank of America analyst Michael Hartnett dubbed them the Magnificent Seven in 2023. Here is how each of them performed year-to-date (YTD) vs over one year:

Year-to-date, Alphabet and Tesla suffered largest dips.

Microsoft stands out from the crowd as the only blue-chip without gains over both periods. The main culprit for the negative yield this year is the lackluster revenue outlook in Q2FY25. Although the company still tracked double-digit annualized growth, at 12.3%, it was lower compared to prior quarters. Likewise, Microsoft’s Azure cloud service slowed down from 33% in the previous quarter to 31%.

Nvidia and Tesla share near-equal one-year performance but for different reasons. Nvidia not only holds over 80% dominance in discrete GPUs and AI accelerators, but is the main supplier of AI chips for Big Tech hyperscalers. This fundamental keeps NVDA stock rebounding after price corrections.

On the other hand, Tesla stock is beholden to Elon Musk persona. Prior to President Trump winning elections, TSLA shares struggled to get out of the negative territory. This abruptly shifted following the win, only to fizzle out over the last three months, nearly back to Robotaxi Day level in October.

In the meantime, Apple continues to count on massive stock buybacks in place of stalled smartwatch sales and faltering AI features rollout for the iPhone 16 series. Meta Platforms suffered the least negativity, both in performance and sentiment, owing to its ongoing integration of Llama AI across Facebook, Instagram, and WhatsApp as dominant social media apps outside of X.

Given that Meta already provides services to over 3 billion people, an AI in tune with users’ needs will be critical to boost engagement and revenue growth. Apologizing for mass censorship and getting rid of “fact-checkers” were just the first steps in that direction. Moreover, this gives Zuckerberg more leeway to reduce human bloat, as 3,600 layoffs were announced for 2025 so far.

Lastly, Amazon is in the same boat as Microsoft and Alphabet in terms of stalling cloud growth. In February, the company reported 19% annualized revenue for Amazon Web Services (AWS), the same as the prior quarter while also missing the LSEG estimate of $28.87 billion revenue vs $28.79 billion reported.

With that said, which two Mag7 stocks are worth considering at this moment, as having the largest rally potential?

Tesla Gained Another Valuation Layer

For years, TSLA stock has been regarded as a hybrid tech-auto stock. Elon Musk made it happen by promising a revolutionary FSD feature that could eventually transform the company into a ride-sharing business. In turn, Tesla would transition from a cyclical revenue company to one that is akin to a utility business with growing and stable cash flows.

Musk projected this would grow Tesla’s market cap to $5 trillion. Already, this narrative has made Tesla’s market cap surpass legacy automakers like Volkswagen, Toyota (NYSE:TM), General Motors (NYSE:GM) and Ford.

But right now, Tesla is in a bind owing to Elon Musk’s DOGE efforts. To put it succinctly:

• In addition to combating the “woke mind virus”, Musk’s Department of Government Efficiency is unraveling patronage networks that fund much of the political life both globally and in the U.S.
• However, this machinery is well-honed in coordination and repetition. Case in point, although it was demonstrable that “Russian Collusion” was a hoax from the get-go, it persisted as false reality for years.
• The same coordination and repetition is now leveraged against Elon Musk, as a political opponent.

Given the fact that public opinion is effectively a function of elite programming, opposition to Elon Musk has now become an opposition to Tesla cars themselves. By the same token, this serves as a rallying cry for the majority on the opposite side, as demonstrated by election results.

President Trump had already called violence against Tesla as domestic terrorism last week, noting that perpetrators will “go through hell”. What this means is that Tesla could very well become a symbol for the MAGA movement, in addition to a symbol for meaningful reform.

In other words, Tesla gained another valuation layer – political – compounding on prior hybrid tech-auto status. From this perspective, as the Trump presidency only started, a 40% YTD dip for TSLA stock should be viewed as an opportunity. After all, historically, Tesla typically surges in high double-digit or even triple-digit gains after such severe drops.

Image credit: Nasdaq via Trefis Team

Alphabet: Smart Bet for Long-Term Growth

More than any other company necessary to facilitate U.S. hegemony, it is Alphabet, the parent company of Google, YouTube, and autonomous ride-hailing startup Waymo. Such origin is more clear-cut given that Sergey Brin and Larry Page, Google’s founders, received grants via the Massive Digital Data Systems (MDDS) program.

In turn, Google became a vital node for global influence through its search engine dominance, serving as a filter for narratives. Alphabet aims to fortify that dominance with more responsive AI-powered outputs. This is already present in the form of AI Overviews, having launched last May.

A granular control via Google’s Gemini AI is critical to manage public opinion. This need is even more evident on YouTube, which keeps expanding forbidden words and concepts, while also auto-removing/hiding users’ comments if they step outside the allowable opinion.

While this may seem bearish at a glance, it bears remembering that normalization is easy when market share dominance is nurtured. The world’s most influential NGO, Tony Blair’s Institute for Global Change (TBI) likened this AI-powered transformation as “critical for our futures”.

In this light, the recent proposal by the Department of Justice for Google to divest from Chrome browser should be viewed as temporary bearish. In the long run, Google’s ecosystem is sufficiently deep to adapt. At the same time, such divestment is likely to reduce Alphabet’s future antitrust liability, improving Google’s public image and investor sentiment in the process.

Against its current price level of $159.79, WSJ’s average GOOGL price target is $219.29, while the ceiling target is $250 per share. Even the low estimate of $184 is significantly above the present GOOGL price level.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

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