The Magnificent Seven stocks have been some of the top-performing stocks in the S&P 500 in recent years. Their outperformance and market weight in the index are so pronounced that many fund managers favor the Mag 7 stocks in their portfolio lineups.
There’s even an exchange-traded fund (ETF) that only holds the Mag 7 stocks. That fund, known as the Roundhill Magnificent Seven ETF (ticker: MAGS), has soundly outperformed the Nasdaq composite and S&P 500 over the past year with a return of 22.3% as of June 16.
It’s no wonder many investors obsess over the Magnificent Seven: Nvidia Corp. (NVDA), Apple Inc. (AAPL), Microsoft Corp. (MSFT), Amazon.com Inc. (AMZN), Alphabet Inc. (GOOG, GOOGL), Meta Platforms Inc. (META) and Tesla Inc. (TSLA).
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Each of these companies has produced tremendous returns for their investors over the past decade, with Nvidia and Tesla standing out from the pack. However, the previous decade of returns doesn’t dictate how the next decade will go. Investors have to look at current valuations and growth catalysts to determine which Magnificent Seven stocks offer the most value for their money.
U.S. News spoke with multiple experts to assess the valuation of each one to determine which look the most attractive now. For the purposes of this article, “cheap” is not determined by the actual price of the shares but by whether a company represents a good value for investors. Needless to say, amid geopolitical and macroeconomic uncertainty, not everyone’s in total agreement on best values. But there was enough consensus surrounding particular Mag 7 stocks to make some general observations:
— Alphabet: The cheapest Mag 7 stock.
— Nvidia: Undervalued if growth remains strong.
— Microsoft: Cheap due to its first-mover advantage.
— Tesla: The most overvalued Mag 7 stock.
— Apple: Slow growth and lagging the AI race create risks.
— Amazon and Meta Platforms in the middle.
Alphabet: The Cheapest Mag 7 Stock
Alphabet rocketed to success on the backs of search-engine giant Google and social media platform YouTube. The company makes most of its money from online ads, but it has branched out to the proven cloud computing
industry and is making big advancements in the autonomous vehicle industry through Waymo.
Matthew Stith, portfolio manager and principal at Bartlett Wealth Management, views Alphabet as the cheapest, or best-valued, Magnificent Seven stock you can buy right now.
“Looking just at P/E ratios, the stock trades at 18.3 times and 17.3 times 2025 and 2026 street EPS estimates, well below the 10-year average of 23x. This is well below all other Mag 7 names,” Stith said in mid-June. “Assuming normalized EPS growth is around 10% to 12%, which may be conservative, the company’s PEG ratio is in the 1.4x to 1.7x range, also a discount to most of the Mag 7.”
Stith says Alphabet isn’t just undervalued compared to other Magnificent Seven stocks; it’s also undervalued against the S&P 500. “Over the last 10 years, GOOGL has traded at 1.23x the S&P 500; today it trades at 0.83x. Growth is slowing at GOOGL, and there are other concerns that are impacting these metrics, but from a pure valuation perspective GOOGL looks undervalued to me,” he says.
Nvidia: Undervalued if Growth Remains Strong
Nvidia has the second-highest P/E ratio among the Magnificent Seven stocks, at 47, but the AI chipmaker has positioned itself as the clear leader in the most promising industry right now. This positioning has helped Nvidia deliver exceptional revenue and net income growth that makes it more compelling than it appears on the surface.
Stith also mentioned Nvidia as a stock that he believes is undervalued. “Looking at forward 12-month earnings estimates, the stock trades at 30x. To put things in perspective, NVDA has traded at 36x, on average, over the past 10 years,” he says. “Its PEG ratio is the cheapest in the group at less than one times projected three-year earnings growth. Assuming earnings growth normalizes in the mid-teens, the PEG ratio is still very attractive at around 2x. While growth will eventually slow, it should remain very strong at least through 2026.”
[Read: 5 ETFs That Outperform the S&P 500]
Microsoft: Cheap Due to Its First-Mover Advantage
Microsoft also makes the list of the cheapest Mag 7 stocks, as highlighted by Michael Martin, vice president of market strategy at TradingBlock. Martin highlighted Microsoft’s early investment in OpenAI as a sign that the company is ahead of the competition in the AI race.
“Microsoft invested $14 billion in OpenAI, starting back in 2019, long before most of the tech world was even paying attention. While Microsoft can be viewed as a competitor to OpenAI today, I see the companies as complementary,” Martin says. “Microsoft’s investment in OpenAI shows it was way ahead of the game. It’s not just throwing money into AI; it’s doing so strategically and effectively.”
Martin adds that “while OpenAI may be building its competitive tools and diversifying partnerships, the two remain deeply intertwined.”
Microsoft isn’t just an AI leader. The company has the second-largest cloud platform in Microsoft Cloud and also gives investors access to personal computers, software products, gaming and other industries. Microsoft is a well-diversified company poised to grow in multiple segments.
Tesla: The Most Overvalued Mag 7 Stock
Although experts had different opinions on which Mag 7 stock was the most undervalued, they all agreed on Tesla being the most overvalued stock of the bunch.
“I feel that TSLA is the most overvalued Mag 7 stock, as it trades at 169 times December 2025 EPS estimates and 112 times December 2026 EPS estimates,” Stith said in mid-June. “The stock trades above its long-term average relative to the S&P 500.”
Robert Johnson, a professor of finance at Creighton University’s Heider College of Business who agreed that Alphabet is the most undervalued stock, also pointed to Tesla as the most overvalued stock of the bunch.
“There is no question that on a value investing basis, Tesla is the most expensive Mag 7 stock right now. It sells at atmospheric multiples of 164 and 76 on a price-to-forward-earnings and price-to-cash-flow basis, respectively,” Johnson said. “None of the other Mag 7 stocks approach those multiples.”
But Johnson had a caveat: “While I wouldn’t bet on Tesla at these valuation levels, I wouldn’t bet against the firm either.” He pointed out that “the market can remain irrational longer than you can remain solvent.”
However, he paints a clearer picture of Tesla’s long-term outlook. “Short term, there is no way of predicting what TSLA’s stock price will be. But long term, there are several risks, including a general pullback in the market that would likely impact speculative stocks more than less speculative stocks.” He adds that “the biggest risk is that Tesla isn’t the big winner in the electric vehicle sweepstakes.”
Apple: Slow Growth and Lagging the AI Race Create Risks
Apple has been one of the top-performing stocks over the past decade, but concerns about slow growth rates and falling behind in the AI race have caused some people to be skeptical about future gains.
Stith highlighted the misalignment between the stock’s current valuation and its growth rates in mid-June. “AAPL also looks overvalued to me, especially when looking at the company’s projected growth rates. The stock trades at 27x calendar 2025 EPS estimates and 25x calendar 2026 EPS estimates.” While not as expensive as some other Mag 7 names from a pure P/E perspective, AAPL’s growth rate and projected growth rates are not nearly as robust. The stock is trading at a (PEG ratio of 3 or more) when thinking about long-term earnings growth of 8% to 9%.”
Martin also points out Apple as an overvalued Mag 7 stock and worries that innovative technology can cause Apple to fall behind. “If we look at current valuation relative to future performance, I see AAPL in the most trouble,” he says. “What worries me most here is the device of the future. It may very well not involve the traditional screen that Apple built its empire on. (OpenAI’s) Sam Altman and Jony Ive recently announced the launch of an upcoming device that’s completely screenless. Where does that leave Apple?”
Although innovation is a core piece of Apple’s branding, the tech giant has failed to impress with recent product launches. Most of its success has hinged on the iPhone and brand loyalty; however, iPhone sales growth hasn’t been as captivating in recent years. And Apple’s share-price gains have significantly outpaced its revenue growth over the past few years, experts say.
Amazon and Meta Platforms in the Middle
To recap, Alphabet, Nvidia and Microsoft rank as some of the cheapest Mag 7 stocks, while Tesla and Apple are getting most of the criticism. Amazon and Meta Platforms remain squarely in the middle.
Amazon shares offer exposure to the company’s hugely successful online store, Amazon Web Services, online ads, Whole Foods, streaming services and a variety of other businesses. Amazon is a well-diversified business that has delivered tremendous returns for investors.
Meta Platforms has also delivered robust returns, especially for investors who bought at the bottom in 2022. Almost all of its revenue comes from online ads, but the company is expanding into AI and wearable technology like its Ray-Ban Smart Glasses. Meta’s recent $14.3 billion investment in Scale AI represents another step to diversify its revenue beyond online ads, and the addition of in-app ads to its WhatsApp platform shows Meta’s still growing that business as well.
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What Are the Cheapest Mag 7 Stocks You Can Buy? originally appeared on usnews.com
