These ‘Magnificent Seven’ Stocks Are Brilliant Buys for Artificial Intelligence (AI)

ChatGPT’s arrival in late 2022 kicked off a bull run in artificial intelligence (AI). A group of prominent tech stocks called the “Magnificent Seven” – Apple, Amazon (AMZN 0.91%), Alphabet (GOOG 0.86%) (GOOGLE 0.89%), Meta Platforms (FINISH 0.40%), Microsoft, Nvidia (NVDA -1.59%)AND Tesla — constitute a significant part S&P500.

The enormous growth opportunities in artificial intelligence have driven up the stock prices of these companies and pushed the entire market to new record highs.

While some Magnificent Seven stocks are too expensive to justify buying today, others may have room to grow. Here are four that are still great AI buys today:

1. Nvidia

AI models require powerful computing systems to process massive amounts of data. Nvidia’s AI chips have become the clear leader for the big tech companies building these systems.

The company’s H100 series of chips powered the early stages of the AI ​​revolution, and is now set to launch Blackwell, a next-generation chip architecture that could take AI to the next level.

So far, Nvidia has maintained a dominant position in the AI ​​market, and there is little indication that this will change.

Analysts expect Nvidia to end the fiscal year with revenue of $125 billion and grow it by 40% next year to $175 billion. That should fuel rapid profit growth, with analysts estimating earnings will grow by more than 41% annually over the next three to five years. The stock is trading at a price-to-earnings (P/E) ratio of 41 times this year’s earnings estimates, likely making Nvidia a bargain if its earnings rise even slightly near estimates.

2. Alphabet

Alphabet is already one of the most influential companies in the world, and AI is a case of the rich getting richer. The company has everything you need to unleash AI’s potential: deep pockets to build data centers, a ton of first-party data to train its models, and a dominant product to distribute its technology.

The company dominates the internet search engine market to the point that it has been declared a monopoly, and is now introducing artificial intelligence features to its search engine, YouTube and across its business.

These improvements should help the multi-trillion dollar company thrive in the future. Analysts believe that Alphabet will grow earnings by an average of 17% per year over the long term.

The stock is currently trading at a P/E ratio of just 21. This is a bargain for a company whose earnings are growing so quickly, and investors are getting a business with a wide moat that many would consider justification for a higher valuation. Alphabet Quality AND the low valuation makes it a worthwhile purchase.

3. Meta Platform

Meta Platforms has a lot in common with Alphabet. It’s basically a cash-flowing printing press that has the computation, data, and distribution needed to become a force in AI in the years to come.

Meta is one of the largest companies with a founder as CEO, and Mark Zuckerberg is only 40 years old. His vision helped Meta become the de facto leader in global social media through Facebook, Instagram, WhatsApp, and Threads, and he still has decades of advantage at the helm.

Zuckerberg is a big believer in AI as part of Meta’s future, so it may be the most AI-focused stock market investor you’ll find. It has already incorporated AI into its digital advertising business and LLama, its big language model, into its social media apps.

The company was already growing on the back of its advertising business, but AI monetization could become a bigger story over time. Its price-to-earnings-to-growth (PEG) ratio of 1.4 suggests the stock is reasonably priced for years of AI-fueled growth. Analysts are predicting earnings growth of an average 19% per year over the long term.

4.Amazon

AI is improving the experience on Amazon’s e-commerce platform; for example, it summarizes product reviews to give consumers quick feedback on the items they’re browsing. But the bulk of the company’s AI capabilities will be part of Amazon Web Services (AWS), its cloud business.

Amazon competes with other cloud providers, such as Microsoft, to create the best platform for companies to deploy and manage AI applications. AWS is the world’s leading cloud platform, and integrating AI capabilities is a logical evolutionary step in growing and protecting that business.

As long as Amazon continues to compete effectively, investors should be thrilled by the company’s long-term performance. Analysts expect earnings to grow 27% annually over the next three to five years.

Meanwhile, the stock is trading at a P/E of 40. The company is investing heavily in its business, which could be distorting earnings. The stock may be cheaper than it looks. If valued based on operating cash flow, it’s almost the cheapest it’s been in a decade, despite trading near its all-time highs.

John Mackey, former CEO of Whole Foods Market, a subsidiary of Amazon, is a member of The Motley Fool’s board of directors. Suzanne Frey, chief executive officer at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former chief market development officer and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Justin Pope has no holdings in any of the stocks mentioned. The Motley Fool owns shares in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends the following options: long $395 January 2026 call options on Microsoft and short $405 January 2026 call options on Microsoft. The Motley Fool has a disclosure policy.