Not all Magnificent 7 stocks have continued to roar for investors, with some pundits calling for the removal of certain laggards in the famed cohort. Undoubtedly, when Mad Money host Jim Cramer crafted the group, each firm was firing on all cylinders. Each one of the seven seemed almost unstoppable as the generative artificial intelligence (gen AI) boom took hold.
Fast-forward to today and some Magnificent Seven members have been more magnificent than the rest. Others have been mildly magnificent, and just one—Tesla (NASDAQ:TSLA)—has been dragging its feet.
As the performance of the Magnificent Seven members moves in opposing directions, we may eventually need a new acronym to describe America’s most dominant growers.
So, refer to them as the Magnificent Seven, the Super Six, the Fast Five, or the Fantastic Four, in the meantime, if you will. In any case, I do believe the core of the Seven will hold up for those investors patient enough to wait for the laggards to make up for lost time. Let’s have a look at three of the seven that I’d count on for a comeback in 2024.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, GOOGL) stock is fresh off a correction after briefly hitting new all-time highs of $153 and change back in January. Undoubtedly, a relatively mild earnings result and some missteps made by its Gemini large language model are likely drivers behind the swift decline in excess of 10%.
Additionally, the rise of gen AI may cause an “evening of the search playing field,” so to speak, as rivals leverage tools to overcome Google’s wide economic moat. This makes it one of those Magnificent 7 stocks to keep in mind.
Can gen AI open up a window for firms to disrupt Google’s search dominance?
Possibly. At the same time, superior-gen AI capabilities can also act as a sound defense for Google. At this time, I think Google’s AI defenses are strong enough to fend off (most) competitors hungry to take a stab at the field of AI-powered search.
With Microsoft (NASDAQ:MSFT) recently making headlines for “harmful” content produced by its Copilot Designer image generator tool, it’s now clear that creating fool-proof guardrails for AI image creation is not so simple. In light of this, some of the recent Gemini image generator pressures may be easing for GOOGL stock.
In any case, I continue to view Alphabet shares as an AI powerhouse that deserves to stay in the Magnificent Seven.
Apple (AAPL)
Apart from a few words from CEO Tim Cook, Apple (NASDAQ:AAPL) still seems to be keeping a tight lip about its AI roadmap. Undoubtedly, Apple is working on some AI stuff, with some speculating that the coming developer event (WWDC 2024) will be the big day that allows the firm to catch up (or keep up) with AI rivals.
Either way, it’s not a good look for Apple not to have a language model ready for the public as products like ChatGPT continue to delight the masses. Even Google, which was somewhat late to the AI race, is now in the running with Gemini to compete against ChatGPT and Copilot.
So, how long must we wait before Apple proves its AI doubters wrong?
Maybe it’ll be later this year, as Cook recently hinted, or maybe it’ll be next year or the year after that. Regardless, my guess is that Apple isn’t behind on AI. Instead, I believe companies like Microsoft and Alphabet may be too ahead of the curve. Just because a product arrives late doesn’t mean it can’t be the very best or the most capable. All in all it’s one of those Magnificent 7 stocks to consider.
For now, Apple is a Magnificent Seven company fighting to bounce back from a correction. Some analysts believe Apple can push to new highs, perhaps past the $220 mark.
Tesla (TSLA)
Finally, we have the least magnificent of the Seven. The electric vehicle firm is in a brutal bear market that saw it get kicked out of the $1 trillion market cap club. With mild expectations for 2024 and the new Cybertruck, the big catalysts for Tesla stock seem to lie further out, perhaps many years out.
Innovations like self-driving capabilities take time. And some shareholders don’t have the patience to wait for the significant breakthroughs to take off. Evercore analysts recently remarked that Tesla seems to be more of a “2027 story,” and they’re probably right. It could take some time for Tesla stock to be magnificent again.
Given the cyclicality of the auto industry, Tesla may not be so quick to overcome headwinds this time around. In the meantime, Tesla’s rough patch could take it lower as its era of magnificence is put into question.
On the date of publication, Joey Frenette owned shares of Alphabet (Class C), Apple, and Microsoft. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
