Will These 4 “Magnificent Seven” Tech Stocks Go Parabolic? Why You Might Win Even if They Don’t.

Meta Platforms (NASDAQ: META) used to be known as Facebook, but it changed its name to reflect the fact that it’s about much more than just Facebook. It owns Instagram, Messenger, and WhatsApp, for example, and it’s been busy investing in developing technologies such as AI, where it’s spending billions. It has already deployed AI functionality into its social networking platforms, and CEO Mark Zuckerberg has said, “Meta AI is on track to be the most-used AI assistant in the world by the end of the year.”

Meta’s third quarter featured revenue up 19% year over year, with net income up 35%. The company noted that it had 3.3 billion daily active users across its platforms, up 5% year over year. That massive reach is one reason Meta Platforms may keep growing rapidly, as it rakes in money via online advertising and finds other ways to monetize.

With its recent forward P/E of 24 a bit above its five-year average of 21, the stock doesn’t seem bargain valued, but does seem reasonably valued. So, if you believe in its long-term potential, you might invest in it now — or add it to your watch list, hoping for a pullback in price. Another option is to spend a portion of what you want to spend on Meta shares now and plan to buy more shares later.

Alphabet is another Magnificent Seven stock investing heavily in AI, with its dominant search engine Google now incorporating AI successfully. Alphabet is more than just Google, though, as it also encompasses YouTube, Fitbit, Nest, and other businesses.

Some worry that due to antitrust concerns, Alphabet might get broken up. That might not happen, though, and if it does, it’s not necessarily bad news for investors. Shareholders would likely end up with parts of any newly formed businesses. In the meantime, the business is growing quickly and is likely to continue doing so in the years to come. Its impressive third quarter featured revenue up 15% year over year and net income up 34%.

With its recent forward P/E of 19 well below its five-year average of 23, the stock seems somewhat fairly valued. It’s easy to see it growing robustly in the years to come, as it generates boatloads of cash, is in strong financial shape, and enjoys competitive advantages such as the network effect — where, for example, YouTube is so huge that it’s where video producers go to share videos with a huge audience.

Then there’s Microsoft, another multifaceted business that includes the seemingly ubiquitous Office productivity software, the Azure cloud computing platform, the Xbox gaming platform, and the Windows operating system, among other things. Microsoft is also — yes, you guessed it — well positioned to profit from the growth of AI, having invested billions in ChatGPT creator OpenAI and incorporating AI into many of its offerings.

Microsoft is yet another behemoth managing to grow briskly. In its quarter ended Sept. 30, revenue jumped 16% year over year, while net income grew 11%. It exceeded expectations, but management’s guidance for the coming quarter disappointed some. With its recent forward P/E of 31 close to its five-year average of 30, Microsoft seems appealingly valued.

So consider investing in — or holding — one or more of these Magnificent Seven stocks, as they can help lead your portfolio to more magnificent results over the long term. They might even deliver some parabolic returns over some short periods.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Selena Maranjian has positions in Alphabet, Amazon, Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Will These 4 “Magnificent Seven” Tech Stocks Go Parabolic? Why You Might Win Even if They Don’t. was originally published by The Motley Fool