Following Monday’s market pullback, so-called Magnificent Seven stocks bled over $650 billion worth of capital. The global equity market realigned with a combined market signaling coming from Warren Buffett’s sale of ~390 million Apple shares (NASDAQ:AAPL), weak US jobs report, and Japan’s yen carry trade.
By consolidation and network effect, Apple, Microsoft (NASDAQ:MSFT), Amazon.com Inc (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL), Meta Platforms (NASDAQ:META), and Nvidia (NASDAQ:NVDA) have become the pillars of the global, modern digital age and logistics.
Tesla (NASDAQ:TSLA) is the seventh odd one out given its precarious EV positioning against Chinese automakers BYD (SZ:002594) and Li Auto (NASDAQ:LI) but also against encroaching Toyota (NYSE:TM).
With nearly $3 trillion lost in market value since early July, which Mag 7 stocks should investors consider as the most resilient moving forward?
Nvidia
After relentlessly climbing over multi-trillion milestones, Nvidia took a 10% hit over the week, going down from $125.83 to $106.15 in a one-month span.
According to a Microsoft insider leak to The Information, Nvidia’s internal problem of timely delivery of Blackwell architecture chips (B200) is compounding the spooked market.
Delayed from October to Q1 2025 means a cut of up to $3 billion in potential revenue. But does that change Nvidia’s AI-reliant bottom line? Nvidia still has a backlog in H100 and H200 chips, and there is no sign of other companies replacing Nvidia’s framework for training AI models.
Widely viewed as the most optimized and proven, this data center foundation will likely keep Intel’s Gaudi 3 and AMD’s MI300 on the outskirts for now, more so as Intel (NASDAQ:INTC) expects only $500 million in Gaudi 3 revenue for 2024, while both AMD (NASDAQ:AMD) and Nvidia rely on TSMC’s capacity, which has been fully allocated.
The bottom line is that if generative AI is to become the core of digital life shortly, Nvidia will be at the center of it.
Nasdaq’s average fair value twelve months ahead – $144.17 vs the current $106.15 per share.
Alphabet
As of Monday, Alphabet is a convicted monopolist. In a 277-page opinion, US District Judge Amit Mehta ruled that Google expended great effort to engage in monopolistic practices, such as paying an average of $10 billion annually for Google search to come pre-installed across platforms.
This is reminiscent of Microsoft being forced to decouple its Internet Browser (IE) Explorer from Windows OS. Yet, the company has only experienced double-digit growth since. With Alphabet, severe repercussions from the ruling are even more distant.
After all, Google started in the mid-1990s as the offshoot of a DARPA grant for the NSA’s joint Massive Digital Data Systems (MDDS) program. Moreover, Google’s leaked document “The Good Censor” indicates the company’s critical role in shaping the information landscape.
To expect Alphabet to be meaningfully broken would be to expect deep power brokers to give up their main tool of control. Ahead of possible remedies, it is likely that users will be given more choices that will benefit Microsoft as another gatekeeper.
In the meantime, Alphabet’s revenue is set for more growth as Google Cloud integrates AI-based services and tools into its deeply entrenched ecosystem. Nasdaq’s average fair value twelve months ahead – $204.74 vs current $161.89 per share.
Amazon.com
Amazon still dominates cloud hosting with its AWS data center infrastructure, with revenue up 19% YoY in the last Q2 earnings report to $26.3 billion. This was offset by a missed quarterly estimate of $148.67 billion in net sales vs. the reported $147.98 billion.
Likewise, Amazon’s Q3 guidance was lackluster, set for 8% – 11% year-over-year growth. This dynamic brought AMZN stock from $200 to $167 in one month. In a recession scenario, although not as resilient against recession as Costco (NASDAQ:COST), Amazon has proven it can adapt by shifting to essential goods sales.
Moreover, Amazon’s diversification into services like Prime Video is expected to boost revenue moving forward. The company’s Q2 showed a 12% increase in ad revenue to $12.77 billion. Amazon also gained its NBA contract worth $1.8 billion (annual over 11 years) against Warner’s TNT.
Given that Amazon Prime Video started integrating ads in January 2024, with a $2.99/month exclusion option, this is likely to boost the company’s bottom line over the long run.
Nasdaq’s average fair value twelve months ahead – $223.58 vs current $166.76 per share.
Meta Platforms
Of the Mag 7, META stock was the most resilient over the week, having lost only 2.6% of value. From the month ago’s $539.91, META shares are down to $495.40 per share.
In Q2 earnings, Meta beat both revenue and profit estimates and provided better-than-expected Q3 guidance. The company’s earnings per share were $5.16 vs. $4.73 expected (per LSEG), while revenue increased to $39.07 billion vs. $38.31 billion expected.
As analysts expected a $39.1 billion Q3 forecast, Meta surprised shareholders with $39.75 billion as middle ground for the $38.5 – $41 billion range. The Texas facial recognition data lawsuit is in the rear view mirror, settled for $1.4 billion.
Meta is less reliant on user growth and more focused on cost cuts, having laid off 21,000 people since late 2022. Even still, the company’s ecosystem of apps could count on 3.27 billion daily active people (DAP) in Q2.
Moreover, Meta’s Llama 3 looks to be a more capable AI model than ChatGPT. Nasdaq’s average fair value twelve months ahead is $578.69 vs. the current $495.40 per share.
Microsoft
Almost equal to Meta in wider market pullback resilience, MSFT stock lost 2.78% value over the week. From a month ago at $467.56, MSFT shares are down to $405.64.
Although having reported better-than-expected total revenue in Q2, Microsoft’s Azure cloud growth of only 21% to $36.8 billion dampened investor expectations of $37.2 billion. Like Alphabet, Microsoft faces antitrust moves, given its strong market reach.
This time, the European Commission frowned upon Microsoft’s bundling of Teams chat with Office 365 suite, effectively cutting out competitors like Salesforce-owned Slack. However, after already making efforts to decouple products, severe penalties are unlikely.
Nasdaq’s average fair value twelve months ahead – $503.19 vs current $400.03 per share.
Apple
Throughout the year, Apple has received unfavorable news. From a canceled Apple car project to declining iPhone sales in China, negative sentiment prevailed. Yet, despite the outlook, AAPL stock gained 14.3% value year-to-date.
The most recent reduction of shares in Warren Buffett’s Berkshire Hathaway (NYSE:BRKa) portfolio had a muted effect after investors built resistance in Q1’s reduction by 13%. Over the week, AAPL shares are down nearly 5%, as Hathaway still holds ~400 million AAPL shares from the previous quarter’s 789 million.
Looking ahead, much is expected of Apple Intelligence, delayed a few weeks after Apple launched iOS 18 and iPadOS 18 in mid-to-late September. Combining text, image, and video manipulation boosted by AI, the new features should bolster the case for owning the iconic brand.
In fiscal Q3, Apple still managed to beat the earnings per share estimate of $1.34 at $1.4 despite the 0.9% decline in phone sales to $39.30 billion. Like Tesla, Apple faces tough competition from China’s Huawei, OPPO, and Vivo, with iPhone sales going down 6.5%.
Nasdaq’s average fair value twelve months ahead – $248.96 vs current $212.44 per share.
Tesla
Beneficiary of multiple in-depth coverages, from its energy play to robotaxi gambit, Tesla remains in a vulnerable position. Tariffs will have to stave off Chinese competitors, such as BYD’s Seagull at ~$12k from grabbing a huge portion of Tesla’s EV market.
While the EU has already increased the barrier to cheap Chinese EVs, a similar course is expected if Donald Trump secures 2nd presidential term in November’s elections. In March’s appearance on CNBC, former President Trump noted that an escalating trade war with China is on the table, specifically for the automotive sector.
Outside of that, Tesla has to overcome the hard technical challenge of full-self driving (FSD). More meaty news on that front are expected in October, delayed from August 8th.
Although highly precarious, Nasdaq’s average fair value twelve months ahead is $211.59 vs. the current $193.05 per share.
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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.