Which Is the Best “Magnificent Seven” Stock to Buy Right Now?

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Previously, these were known as the FAANG stocks. More recently, they have been referred to as “The Magnificent Seven”. This label represents the businesses that the market considers among the most powerful globally. Their shares have experienced significant growth, a major factor contributing to their popularity among investors.

Among the top-tier companies, which one makes up the Magnificent Seven portfolio that investors should consider purchasing at this moment? The response to this question is as obvious as the sun in the sky.

Dominant internet enterprise operating from a position of strength

In my viewpoint, the noteworthy stock that investors might consider investing in today is none other than Alphabet Inc. (GOOGL) (GOOG). As artificial intelligence (AI) reshapes the way people access and gather information, there has been a palpable concern about this internet behemoth’s competitive edge being threatened. Yet, I believe investors should not fret over this issue.

Google Search is a significant contributor to Alphabet’s income, generating approximately $50.7 billion in the first quarter alone. This figure represents a 9.7% increase compared to the same period last year and is 25.5% higher than it was two years ago, even amidst the emergence of ChatGPT from OpenAI. CEO Sundar Pichai reports that the AI Overviews function is performing exceptionally well, with over 1.5 billion users utilizing it each month.

Alphabet holds a strong position due to its impressive product lineup. As stated by Pichai, they have 15 products that cater to about half a billion users, and six of those reach over 2 billion each. This widespread user base sets Alphabet apart from other companies, providing them with a distinct advantage in terms of distribution for launching new AI features. Additionally, Google Gemini is already built into these services.

Google, with its strong foundation as an alphabet company, is well-positioned to lead in AI technology, particularly for individual users. Moreover, from a business standpoint, it’s gearing up to become a significant player in AI, leveraging Google Cloud. Notably, its Vertex AI platform empowers customers to create and deploy custom Generative AI applications. This unique service could prove indispensable for businesses eager to stay competitive in the rapidly advancing AI landscape.

In addition to positioning Alphabet as a leading contender in the AI platform market through Google Cloud, the company is simultaneously focusing on hardware development. Specifically, Alphabet is designing tensor processing units (TPUs), which are custom-made chips designed for handling large-scale inference tasks more efficiently. During the Q1 2025 earnings call, Pichai announced that these new TPUs offer over ten times the computing power of their previous high-performance models while being nearly twice as energy efficient.

Alphabet, boasting a substantial cash reserve of approximately $95 billion (as of March 31), has the financial muscle to take aggressive steps and maintain high speed. The company intends to allocate an impressive $75 billion this year for capital expenditures, primarily to fortify its technological foundation by constructing servers and data centers.

So far, we haven’t brought up YouTube in our discussion, but it’s important to note that it currently holds the top spot for daily TV viewing time among all streaming competitors in the U.S., according to Nielsen data. This is significantly more than what Netflix, for example, enjoys. Moreover, YouTube’s value increases as its pool of content creators and viewers expands due to a strong network effect.

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Bargain hiding in plain sight

Smaller, less prominent companies might appear as the most promising investments to some investors. However, it’s essential to note that this assumption is not always accurate.

The alphabet is an unnoticed yet substantial investment, with a staggering market value of around $2.2 trillion. Last year alone, it generated approximately $350 billion in earnings.

From an external perspective, I find its valuation quite enticing. As of July 15, the stock is trading at a Price-to-Earnings (P/E) ratio of merely 20.3. This figure is lower than the average for the S&P 500, making Alphabet an attractive buy. Among the esteemed Seven businesses, it stands as the most affordable, lending credence to the belief that this company should be a valuable addition to any portfolio.

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2025-07-20 04:52