Dividend Stocks

3 Powerful Stocks Worthy of Magnificent 7 Status

If you don’t own at least one of the Magnificent Seven technology titans, odds are you’re probably trailing the S&P 500 by a wide margin. Indeed, beating the market is tough without some help from the technology sector’s biggest, brightest stars. After explosive rallies enjoyed in recent months, though, some may view the Magnificent Seven as less of a great deal. After all, we’ve known about their AI potential for quite a while now. Yet, some new potential magnificent 7 stocks may be more deserving of the title.

Though the AI boom still has room to run for many quarters or maybe even years, I don’t blame you if you’re in no rush to pick up shares of your favorite Magnificent Seven companies. Valuations are starting to get on the high side. And while some premium is deserved, it’s all right to feel more cautious about the names while some trade at multiples not seen in decades.

While I don’t see a Magnificent Seven bubble forming, I find more value in alternative names, some of which may be worthy of similar status. Here are three:

Eli Lilly (LLY)

Eli Lilly (LLY) sign on corporate building with blue sky in background

Source: shutterstock.com/Michael Vi

Eli Lilly (NYSE:LLY) is a biotech innovator that’s tapping into two of the hottest technologies around these days: GLP-1s and AI.

On the AI front, the company has teamed up with various AI firms, including OpenAI, to help find new medicines in a new, exciting, and hopefully faster and more effective way. As Eli Lilly deepens its relationship with some of the biggest names in AI, perhaps the nearly $850 billion biotech heavyweight is the way to play AI-assisted drug discovery.

On the front of GLP-1 (weight-loss) drugs, Eli Lilly’s Mounjaro landed a nice win this week. A recent study showed that Mounjaro outdoes Novo Nordisk‘s (NASDAQ:NVO) Ozempic when it comes to weight loss. That’s a huge win that may crown Mounjaro the current king of weight-loss drugs.

Everything Eli Lilly touches seems to turn into gold. Though expensive, LLY stock is still worthy of a look as it attempts to reach the $1 trillion market cap milestone.

Dell Technologies (DELL)

A Dell (DELL) office in Santa Clara, California.

Source: Ken Wolter / Shutterstock.com

When discussing potential magnificent 7 stocks, Dell Technologies (NYSE:DELL) is among one of the recently discovered AI winners. Its stock is now up 95% year to date, an impressive rally that may still have room to run in the second half. As AI servers look to gain traction, perhaps more than the GPU makers themselves, Dell stands out as a firm equipped that may just outshine the Magnificent Seven going into year’s end.

At 18.7 times forward price-to-earnings (P/E), DELL stock still seems like more of a value play than a firm with a good footing and a steady pace to one of the biggest races in decades. Several big-name analysts are praising the firm as a Buy, including Morgan Stanley‘s (NYSE:MS) Erik Woodring, who has the name as a top pick over the potential for accelerating AI server momentum.

Woodring will probably be right. As the AI boom rolls on, we’re probably underestimating demand for Dell’s offerings. Perhaps recent jitters over server margins are overdone.

Netflix (NFLX)

Netflix (NFLX) logo displayed on smartphone on top of pile of money.

Source: izzuanroslan / Shutterstock.com

Netflix (NASDAQ:NFLX) may not be the exciting AI stock to back up the truck this summer. However, it is a firm that’s continued releasing a steady and stacked slate of streaming content. At the end of the day, Netflix is the streaming platform that has swum, as most other industry competitors have sunk.

Prices have been steadily going higher, but for the most part, consumers are fine as long as there’s still plenty to watch on the streaming service. If there’s more value provided, many consumers are fine paying another two bucks or so. Netflix co-CEO Greg Peters noted that price hikes will help the firm offer a “higher diversity of shows” and more “quality.”

As long as Netflix keeps giving customers what they want—more binge-worthy content—they’ll probably be fine with even more price hikes as the inflationary era closes. That’s strong pricing power, in a nutshell. It’s also the kind of pricing that makes NFLX one of the potential magnificent 7 stocks,

On the date of publication, Joey Frenette did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.

Joey Frenette is a seasoned investment writer specializing in technology and consumer stocks. Contributing to the Motley Fool Canada, TipRanks, and Barchart, Joey excels in spotting mispriced stocks with long-term growth potential in a fast-paced market.

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