Nintendo Surpasses 'Magnificent Seven' Stocks Despite AI Headwinds

Nintendo's stock has been on the rise in the second half of 2026, outperforming the so-called 'Magnificent Seven' stocks by a significant margin. This group includes companies such as Microsoft and others that have seen their share prices surge due to demand for computer chips and cloud computing from AI services.

However, with Nintendo's latest gaming console, the Switch 2, selling over 24 million units in its first year of release, investors are starting to take notice. The company has raised the price of the console by $50, but this move seems to have had a positive impact on sales and revenue.

Nintendo's cheap valuation is another reason why its stock could be a good buy right now. With a market cap of almost $64 billion and an enterprise value of less than $50 billion, the company's stock trades at a relatively low price compared to its earnings potential. If Nintendo can continue to show growth in earnings as more people adopt its games, the stock will likely become even cheaper relative to its potential.

It's worth noting that Microsoft is the only Magnificent Seven stock close to Nintendo's performance, up 26% since July 1. However, if the narrative of insatiable demand for computer chips and cloud computing from AI services reverses, the Magnificent Seven stocks could see a pullback while Nintendo continues to rebound.