Before, it was the FAANG stocks. In recent years, the term "Magnificent Seven" was used to group what the market believes are some of most dominant businesses on Earth. These companies' shares soared, a key factor putting them in investors' good graces.
But among these elite businesses, which one is the best Magnificent Seven stock that investors should buy right now? The answer is as clear as day.
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Dominant internet enterprise operating from a position of strength
The Magnificent Seven stock that investors should buy today is Alphabet (GOOGL 0.78%) (GOOG 0.66%). As artificial intelligence (AI) alters how people search for and obtain information, there have been real worries that this internet giant's competitive position is under attack. However, I don't think investors should worry.
Google Search is Alphabet's bread and butter, raking in $50.7 billion in revenue in the first quarter. That figure was up 9.7% year over year and 25.5% higher than exactly two years ago despite the rise of OpenAI's ChatGPT. CEO Sundar Pichai says that the AI Overviews feature is "going very well with over 1.5 billion users per month."
Alphabet operates from a position of power because it has "15 products that each serve half a billion people, and six that serve over 2 billion each," according to Pichai. No company has this type of reach and broad adoption, giving Alphabet a unique advantage with its distribution capabilities to introduce new AI features. And for what it's worth, Google Gemini is already integrated into these offerings.
Alphabet is in a position to be a leading AI company, at least when it comes to serving individual users out there. However, the business is also poised to be an AI powerhouse from an enterprise perspective thanks to Google Cloud. Specifically, the Vertex AI platform lets customers build and deploy their own Generative AI applications. This invaluable offering looks to be a mission-critical partner for customers that don't want to get left behind in the AI race.
Besides Google Cloud making Alphabet a major player at the AI platform layer, the company is also working on infrastructure. Alphabet is developing tensor processing units (TPUs), its custom-built chips made to handle inference at a larger scale. "It delivers more than 10 (times) improvement in compute power over our recent high-performance TPU, while being nearly twice as power efficient," Pichai claimed on the Q1 2025 earnings call.
With deep pockets ($95 billion in cash, cash equivalents, and marketable securities as of March 31), Alphabet has what it takes to play offense and keep its foot on the gas pedal. The company plans to spend a whopping $75 billion in capital expenditures this year to buttress its technological infrastructure and build servers and data centers.
We haven't even mentioned YouTube yet, which might get overshadowed by the market's focus on AI. According to data from Nielsen, YouTube commands the most daily TV viewing time in the U.S. among any streaming rival, well ahead of Netflix. This video platform also benefits from a powerful network effect, with the service becoming more valuable as the number of content creators and viewers grows.
Bargain hiding in plain sight
It's reasonable for investors to think that the best opportunities come from smaller companies whose stocks fly under the radar. This just isn't the case, though.
Alphabet is the perfect example of a bargain that's hiding in plain sight. Yes, it carries a massive $2.2 trillion market cap. And it did bring in $350 billion in revenue in 2024.
However, its valuation is compelling. As of July 15, the stock trades at a price-to-earnings (P/E) ratio of just 20.3. This represents a discount to the overall S&P 500. And it makes Alphabet the cheapest stock of all the Magnificent Seven businesses, supporting the argument that this company should be in your portfolio.
