Alphabet is also a hold, offering strong compounding but very little base margin of safety.
Source Post
The Magnificent 7 Just Split Apart — Here’s What I’d Buy Now
Sep 1, 2026
The creator discusses the divergence within the Magnificent 7 stocks, noting that the group is no longer a single trade. They emphasize that price paid is now as important as the company chosen, and that the average valuation of the group is misleading due to a blend of cheap and expensive members. The analysis shifts focus to valuation and future cash flow, moving away from pure momentum, as the market now expects excellence from AI companies. The creator has rebuilt a ranking of the Magnificent 7 based on growth, profitability, forward valuation, free cash flow, and Wall Street targets, resulting in two stocks to avoid, two holds, and three buys.
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Tickers discussed in this post
Amazon is a strong buy, with its valuation supported by accelerating operating income growth from its consumer business and AWS, driven by AI demand.
Alphabet, at number four, offers faster cloud growth and is an underappreciated AI infrastructure play, but its valuation discount has disappeared after a strong run, making it a hold.
Microsoft is a wonderful company trading at a fair price, with existing shareholders holding one of the best businesses, but new buyers should recognize that the current price reflects consensus growth.
Apple is ranked sixth and is an avoid for new money as its valuation requires growth not supported by its own forward estimates, trading at a premium to its historical multiples.
Tesla is ranked seventh due to its stock price assuming extraordinary opportunity, with current operating economics not supporting the valuation and implying significant downside.
Nvidia validated the AI story and demand, but this validation alone did not settle what comes next, as investors already expect excellence, making future returns dependent on companies that can clear high expectations.