Stocks To Buy

The 3 Best Magnificent 7 Stocks to Buy in May 2024

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The Magnificent 7 stocks have outpaced the stock market for several years. Some stocks in this cohort look like they have more room to run.

Even if you don’t own individual shares of these corporations, you probably have exposure to them in a fund. Any fund that tracks the S&P 500 or the Nasdaq 100 will have sizable positions in each Magnificent Seven stock. It’s possible to outperform major indices by picking the best Magnificent Seven stocks. These are three candidates to keep on your radar.

Alphabet (GOOG, GOOGL)

Alphabet (GOOGL) - Quantum Computing Stocks to Buy

Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) is up by 21% year-to-date and has soared by 184% over the past five years. It started the year strong with 15% year-over-year revenue growth in Q1 2024. Net income jumped to $23.7 billion, up by 57% year-over-year. 

Cost-cutting measures and revenue growth have paid off for the company’s profit margins. Alphabet’s improved finances prompted the corporation to issue its first quarterly dividend of $0.20 per share. Google Cloud continues to outpace advertising growth, representing more than 10% of the company’s total revenue. Alphabet generated $9.57 billion in cloud revenue compared to $80.54 billion in total revenue.

The tech giant has a vast lead in the advertising industry and continues to gain market share in the cloud computing industry. Alphabet’s Other Bets segment also exhibited strong growth. Promising business segments can emerge from Other Bets in the future, adding more diversification to the company’s business model. For now, artificial intelligence is Alphabet’s biggest opportunity for additional growth.

Meta Platforms (META)

After a recent pullback, Meta Platforms (NASDAQ:META) suddenly looks quite attractive. The stock trades at a 22 forward P/E ratio and a 1.07 PEG ratio. The advertising giant beat Alphabet to the punch by announcing a dividend before the end of 2023. However, the corporation delivered solid numbers to kick off 2024.

Q1 2024 revenue was 27% higher than the same period last year. Net income surged by 117% year-over-year to strengthen the company’s profit margins further. Advertising is Meta Platforms’ main area of strength. The company isn’t well diversified yet but invests in artificial intelligence and artificial reality to increase shareholder value. 

These investments can generate losses for multiple years, but Meta Platforms has the financial strength to grow these business segments. The core business — social media platforms — continues to grow. Family daily active users reached 3.24 billion, a 7% year-over-year increase. Meta Platforms achieved these results while trimming its headcount by 10% year-over-year. 

Amazon (AMZN)

Amazon (NASDAQ:AMZN) also had a strong start. Revenue increased by 13% year-over-year in Q1 2024, with a notable 17% year-over-year jump for AWS revenue. Artificial intelligence has reaccelerated AWS’ growth rate and can lead to more gains for patient shareholders. The North American and international segment sales both achieved double-digit growth rates.

The e-commerce giant set another record for speed for Prime customers while lowering its service costs. Advertising was also an area of strength that grew by 24% year-over-year. Amazon has a history of outperforming the market. It’s up 23% year-to-date and has gained 88% over the past five years.

Analysts are feeling bullish about Amazon and believe that the rally can continue. It has a “Strong Buy” rating from 40 analysts and an average price target with a 19% upside. After Amazon’s impressive earnings report, analysts have been rushing to raise their price targets. The highest price target of $245 per share suggests a 32% upside from current levels.

On this date of publication, Marc Guberti held long positions in GOOG and AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.

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