Nvidia, Alphabet, and Amazon Top Picks Among Magnificent Seven
The Magnificent Seven, a group of top US-listed companies, has been dominating equity markets for years. Three members of this group stand out as particularly compelling buys right now, according to Motley Fool contributor Keithen Drury: Nvidia (NVDA), Alphabet (GOOGL), and Amazon (AMZN).
Nvidia is the largest company in the world by market capitalization at around $5.4 trillion, but Drury argues it's 'grossly undervalued' relative to its growth trajectory. The AI arms race is intensifying, with Nvidia poised to capture a significant share of the growing demand for AI computing units.
According to Nvidia's own projections, the five largest AI hyperscalers will spend $1.3 trillion on data center capital expenditures in 2027, up from nearly $800 billion in 2026. The company is well-positioned to benefit from this trend due to its role as primary supplier of AI computing units.
Drury notes that Nvidia trades at around 14.4 times forward earnings and 29 times trailing price-to-earnings ratio, which reflects the growth built into the forecast. If the company hits analyst estimates and maintains a 29-times-earnings multiple, the stock could double between now and the end of its next fiscal year.
Alphabet and Amazon are also spending heavily on AI data centers, but Drury argues that their investments are justified due to their leading cloud computing platforms. These companies are not only building out their own infrastructure but also directly monetizing it through their platforms.