Some tech companies have become household names for their exceptional performance over the years, and investors worldwide continue to see potential in them. Among the most prominent are the so-called “Magnificent Seven” stocks. These companies have become “magnificent” largely because of their solid long-term growth, transformative technologies, and strategic business moves that have consistently increased their market value.

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1. Amazon

Amazon is widely known for its online marketplace, which has become a go-to shopping destination worldwide. But Amazon is more than an e-commerce company. It also operates Amazon Web Services (AWS), the world’s leading cloud computing platform, which generates a significant portion of Amazon’s revenue.

Amazon has continued to grow despite its massive size. In its most recent quarter, Amazon’s revenue rose by 11% year-over-year, while its net income shot up by 55%. Much of this growth is driven by AWS, as well as investments in artificial intelligence (AI) and new technologies.

Currently, the Amazon Stock Price reflects a forward-looking price-to-earnings (P/E) ratio of 34, which is considerably lower than its five-year average P/E of 53. This indicates that Amazon could be undervalued compared to its recent history, making it potentially attractive for long-term investors.

2. Meta Platforms

Meta Platforms, formerly known as Facebook, has evolved far beyond social media. In addition to Facebook, Meta owns other popular apps like Instagram, Messenger, and WhatsApp, giving it a broad reach and influence. Recently, Meta has invested billions into AI, integrating it into its platforms and developing “Meta AI,” which the company expects to become one of the most widely used AI assistants globally.

In its latest quarter, Meta reported a 19% year-over-year revenue increase, with net income rising 35%. The company now has 3.3 billion daily active users across its platforms, a 5% increase from last year.

Meta earns most of its revenue from online advertising, but its investment in AI could open new revenue streams. The company’s forward P/E ratio of 24 is slightly above its five-year average of 21, suggesting it’s not a bargain but still reasonably valued for its long-term growth potential.

3. Alphabet

Alphabet, the parent company of Google, is much more than a search engine. It includes YouTube, Fitbit, and Nest, among other businesses. Alphabet is also heavily investing in artificial intelligence and incorporating it into Google’s services, improving the user experience and efficiency of its platforms.

Despite some concerns about antitrust regulations that could result in a possible breakup of the company, Alphabet’s business continues to thrive. Its recent quarterly results showed a 15% year-over-year increase in revenue and a 34% rise in net income.

Alphabet’s forward P/E ratio stands at 19, which is lower than its five-year average of 23, potentially signaling an attractive valuation for investors. The company’s solid cash flow, strong market position, and substantial resources support its continued growth.

4. Microsoft

Microsoft has built an impressive portfolio of products and services, from Office productivity software and the Windows operating system to the Xbox gaming platform and Azure, its cloud computing division. Microsoft has also made significant investments in artificial intelligence, particularly through its partnership with OpenAI, the creator of ChatGPT.

Despite its size, Microsoft has maintained solid growth. In its most recent quarter, Microsoft reported a 16% revenue increase year-over-year, and its net income grew by 11%. Although management’s outlook for the next quarter was more cautious, Microsoft’s forward P/E ratio of 31 is close to its five-year average of 30, indicating a fair valuation. Microsoft’s financial stability and strategic investments in AI make it a compelling option for tech investors.

Can These Stocks Deliver “Parabolic” Growth?

Parabolic growth refers to a steep upward trajectory in a stock’s price over a short period. While it’s impossible to guarantee such returns, these stocks have the capacity for high performance, particularly over the long term. Even if they don’t skyrocket overnight, they may still yield consistent returns, helping investors achieve long-term growth.

Final Thoughts

Investing in one or more of these “Magnificent Seven” stocks could bring steady, long-term growth to your portfolio. While these companies may not deliver exponential returns overnight, their strong market positions, diverse revenue streams, and investments in cutting-edge technologies like AI make them valuable choices for patient investors.