As Yoda once said, "Always in motion is the future."
And you'll usually find a few companies literally reshaping that ever-shifting future in real time. If you can sort out the makers of the long-term future in the early going, their stocks can be great wealth-building investments for you.
For example, Apple defined the last decade and a half with product lines like the iPhone, iPad, and AirPods. The company hopes to write the next chapter of human innovation and game-changing design with the Vision Pro augmented reality headset, and I can only imagine what else might be going on in Apple's top-secret development labs.
That said, I'm not here to talk about Apple's potentially culture-defining products. Another stock in the "Magnificent Seven" club is even more important to the next era of technology and consumer culture, and its business plan looks poised for decades of sustained success.
That's Alphabet (GOOG 9.96%) (GOOGL 10.22%), of course. The parent company of Google is my favorite Magnificent Seven stock to buy right now, and it's not a close call.
The ABCs of Alphabet's future prospects
So far, you know Alphabet for its online search and advertising operations. Most of its current hits -- from Gmail and Google Docs to YouTube and Google Maps -- are part and parcel of this business. Google's online tools help consumers and companies in many ways. There are premium versions in some cases, but the monetization largely springs from the world's largest and most effective advertising platform.
But that won't always be the case.
Unlike some tech titans clinging to past successes, Alphabet thrives on change. While its core advertising business remains a cash cow, Alphabet isn't afraid to shift gears and invest heavily in the technologies shaping tomorrow. Artificial intelligence (AI) is a fresh example. From the deep learning algorithms powering Google Search to its Waymo self-driving car initiative, Alphabet recognizes the transformative potential of AI and is pouring heavy resources into its development.
And this forward-thinking mindset extends beyond specific technologies.
The creation of the Alphabet brand in 2015 was a pivotal move under CFO Ruth Porat's leadership. Separating the core Google business from "moonshot" ventures like Waymo and Verily Life Sciences (focused on health research) allowed Alphabet to chase disruptive innovations without being tethered to Google's existing structure. The Alphabet brand provides a broader umbrella, allowing the company to pursue ideas that might not fit neatly within the traditional "Google" image.
This move signaled Alphabet's willingness to explore seemingly disparate fields -- medical research today, self-driving cars tomorrow, and who knows what groundbreaking venture next?
Where Alphabet places its big bets
I have only scratched the surface of Alphabet's audacious innovations here. It would take a book to explain them all, and many of tomorrow's best business ideas probably aren't even public knowledge yet.
The company is tackling climate change with Project Loon (balloon-powered internet), exploring human longevity in the Calico operation, and reinventing electric power grids with AI analytics under the Tapestry project. These moonshots may seem like science fiction today, but they have the potential to become tomorrow's revolutionary realities.
So Alphabet is writing the next generation's history books as we speak, always ready to take another sharp turn as the changing market conditions might require. Come back in a decade or more, and I'm sure Alphabet will remain an innovative business giant with a ton of operations you haven't even heard of yet. Google may be a fading name by then (but probably not yet), and Alphabet will still do just fine with a bunch of different ideas.
And the other Magnificent Seven stocks might struggle to do the same.
Alphabet by the numbers
That's the foundation of my investment thesis for Alphabet. Furthermore, the stock happens to look like a great buy right now. Alphabet's stock hasn't soared to the moon in the ongoing AI boom, giving investors more time to pick up shares at a relatively modest price.
An equal-weighted portfolio of the Magnificent Seven stocks gained 70% over the last 52 weeks. On average, they're trading at 7.7 times sales and 38 times trailing earnings.
Alphabet's stock looks like a bargain in this company. With a milder year-over-year price gain of 46%, Alphabet's stock is worth 6.1 times the company's annual sales and 26 times earnings. It's the most affordable Magnificent Seven stock by many metrics, including its price-to-earnings and price-to-cash ratios.
So Alphabet is an epic innovator with its sights set on the far horizon -- and the stock isn't even expensive. Where do I sign up?
