It's tempting to think of the Magnificent 7 as a group of S&P 500 stocks that moves in lockstep. But analysts insist the profit potential of some are far superior to the rest.
Three of the Magnificent 7 stocks — Amazon.com, Microsoft and Alphabet — stand to gain the most in the next 12 months, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSurge. Each of these three stocks are expected to gain 5% or more in the next year. That's five-times greater than the average 1% gain expected from the entire Magnificent 7.
There's a fear some of the Magnificent 7 stocks are getting ahead of themselves. The stocks are up an average of nearly 45% this year.
"Given the recent run-up amid eye-watering valuations and an equity risk premium that is negative compared to short-term yields and in the basement relative to the long end, the risk of a significant drawdown in the 20% range is certainly in the cards," said Jose Torres, senior economist at Interactive Brokers.
Highest Hopes For Amazon
Amazon was left behind as Microsoft, Apple and Nvidia saw their market values race past $3 trillion. But not for long, say analysts.
Shares of Amazon are seen rising more than 12% in 12 months, analysts say. That's the largest expected gain of any of the Magnificent 7. And there's plenty of fundamental power to support such glowing forecasts. Analysts think the company will earn $4.55 a share this year, up nearly 57% from 2023.
And speaking of Microsoft, the software giant is the stock analysts like second best. Shares are projected to rise nearly 9% in a year's time.
Look Out Below In S&P 500
Analysts aren't just hyping up all the Magnificent 7. They're actually pretty cautious on two of them.
Analysts think Tesla is nearly 20% overvalued to where the stock should be in 12 months. And that's not all that surprising if you consider nearly all the S&P 500 stock's value is based on future profits not here yet.
But those in the know are also down on Apple, too. The company still milking the iPhone is expected to see its stock fall 8% in a year's time.
It's always possible the analysts are wrong and all the Magnificent 7 will keep pushing higher. But they're warning you now that's not what they see playing out.
Not All Magnificent 7 Are Equal
| Company | Symbol | Stock YTD % ch. | Upside/downside to target |
|---|---|---|---|
| Amazon.com | 29.2% | 12.3% | |
| Microsoft | 21.0% | 8.5% | |
| Alphabet | 33.5% | 5.7% | |
| Meta Platforms | 42.6% | 4.5% | |
| Nvidia | 164.7% | 3.8% | |
| Apple | 20.6% | -8.0% | |
| Tesla | 0.5% | -19.8% |
