Magnificent Seven Stocks Show Signs of Life Amid Ongoing Investment in AI
The 'Magnificent Seven' stocks, which include Nvidia, Apple, Microsoft, Amazon, Alphabet, Meta Platforms, and Tesla, have been influential in shaping the broader market's performance. Despite their importance, these stocks have varied widely over the past three years, with Microsoft and Amazon being among the worst performers.
Microsoft's recent quarter showed encouraging signs that its high spending is paying off, particularly in its cloud growth. The company's Azure revenue increased 43% year-over-year, reaching $100 billion for the first time. This has helped to alleviate concerns about Microsoft's AI spending, with the company planning to spend $175 billion in fiscal 2027.
Amazon, while underperforming the S&P 500, is still a great buy for patient long-term investors. The company generates more revenue than any other public company and its e-commerce business is growing rapidly. AWS remains Amazon's main growth driver, with a 36.7% jump in Q2 being the biggest in 18 quarters.
Both Microsoft and Amazon have been investing heavily in AI infrastructure, which has raised concerns about their spending. However, their results are tangible, making them attractive options for long-term investors.