The Magnificent Seven stocks make up a large portion of the S&P 500 and the Nasdaq 100. The performances of these seven stocks can potentially make or break the stock market.
While the Magnificent Seven is a relatively new name, the group is quite familiar. Investors may remember hearing about FANG and FAANG stocks for several years. Most of the stocks that made up FAANG are members of the Magnificent Seven.
Corporations change over time and impact long-term investors. Some businesses that once achieved impressive growth rates aren’t living up to the Magnificent Seven stock club. However, these three giants are still delivering solid returns for investors, and it looks like they have more room to climb. Here are the best Magnificent 7 stocks to buy in April.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is becoming the largest artificial intelligence (AI) stock, in addition to Nvidia (NASDAQ:NVDA). While Nvidia produces the chips, Microsoft has made acquisitions and investments left and right. The company is even making moves that resemble acquisitions to avoid regulators.
Microsoft isn’t only expanding through AI. The company also acquired Activision to strengthen its video game segment, which features Xbox. Gaming has been a benefactor for Microsoft, but the company makes most of its money from cloud computing.
Microsoft Cloud revenue grew by 24% year-over-year (YoY) in Q2 FY24. The segment generated $33.7 billion of the company’s $62.0 billion in revenue for the quarter. Microsoft’s overall business delivered an 18% YoY increase in revenue. Net income jumped by 33% YoY, bringing profit margins to 35.3% in the process.
Microsoft is the largest publicly traded corporation and has exceptional long-term returns. The stock is up 245% over the past five years and has already gained 12% year-to-date.
Nvidia (NVDA)
Nvidia has been another top-performing stock that looks like it can extend its rally. The company’s GPU chips continue to gain market share and have given the company a comfortable lead over its competitors.
It’s hard to recall a time when a mega-cap corporation exhibited the same financial growth that Nvidia currently enjoys. The AI giant reported 265% YoY revenue growth and 769% YoY net income growth in the fourth quarter of fiscal 2024.
AI spending will eventually slow down, but Nvidia is still likely to grow at a respectable rate in the years ahead. Investors shouldn’t expect triple-digit growth rates to last much longer. The stock currently trades at a 36-forward P/E ratio and is up 74% year-to-date.
Profit margins have expanded dramatically since the AI boom. The company reported a 55.6% net profit margin to close out the fourth quarter of fiscal 2024. Revenue and earnings growth rates from that quarter have outpaced the stock’s gains over the past year.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) has built the world’s largest online advertising network. Many people instinctively use Google to find information online. I certainly use Google when doing research for articles like this one.
Some visitors click advertisements that display relevant information, and Alphabet has gotten very good at showing relevant advertisements for search queries. Once businesses use Google or YouTube Ads effectively, it’s difficult to leave. Shutting off an ad campaign means walking away from the steady leads and sales that those ads generate.
Alphabet continued to grow its advertising segment in the fourth quarter of 2023. During that quarter, revenue increased by 13% YoY. While ads are the big storyline, Google Cloud has been gaining more market share in the cloud computing industry. That segment is also expanding its profit margins, which helped Alphabet report a 52% YoY improvement in net income.
The company’s stock is up by 152% over the past five years and 9% year-to-date.
On this date of publication, Marc Guberti held long positions in MSFT, NVDA, and GOOG. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
