As Nvidia (NVDA) etched its name into history with a $4 trillion market cap this week, investors were offered a clear reminder: the once-unified “Magnificent Seven” are no longer moving in lockstep.
The tech mega-cap cohort, once praised for synchronized outperformance, is now fractured — with leaders like Nvidia pulling away, while others such as Alphabet (GOOG) and Amazon (AMZN) navigate distinct sets of challenges and opportunities.
Nvidia: At the Heart of the AI Supercycle
Nvidia’s rise from $1 trillion to $4 trillion in just two years is a singular feat, fueled by a relentless global push into artificial intelligence infrastructure. The company's latest guidance forecasts $45 billion in second-quarter revenue — a staggering 50% leap from the same period last year. Investors, undeterred by the stock's nearly 40x forward earnings multiple, remain fixated on its dominance in AI chips.
With global data center investment projected to more than double by 2028, Nvidia is poised to ride that wave. Aging GPUs also promise a replacement cycle that could ensure strong revenue beyond just new deployments. For now, Wall Street views Nvidia as a high-growth asset with a valuation to match — expensive, yes, but justified by its near-monopoly in AI hardware.
Alphabet: Innovation or Inertia?
Alphabet is the least expensive of the original Mag 7, trading at just 17.7 times forward earnings. But that discount reflects real concern. Google’s core search business is under mounting pressure, particularly from generative AI upstarts and younger users gravitating toward platforms like ChatGPT and social media for search functions.
To counteract this threat, Alphabet recently shelled out $2.4 billion to acquire key AI talent and intellectual property from startup Windsurf, following the collapse of its deal with OpenAI. The hires will bolster DeepMind, Alphabet’s AI research unit, but critics argue the company remains reactive rather than visionary in the rapidly evolving AI space.
Citi analysts are holding steady with a Buy rating, citing survey data showing Google’s continued dominance among older demographics. Yet with Alphabet’s stock down 7% this year and competitive pressure rising, investors may need more than cost-effective valuation to stay the course.
Amazon: Undervalued and Underestimated?
While Nvidia captures headlines and Alphabet battles existential threats, Amazon quietly positions itself for a breakout. After a muted start to the year — with shares up just 2.3% — Wall Street is warming to the e-commerce and cloud giant. Analysts at Morgan Stanley and J.P. Morgan both lifted their price targets last week, citing confidence in Amazon’s cloud computing (AWS) and advertising segments.
Amazon Web Services has faced growth deceleration compared to rivals, but analysts argue that only about 10% of global IT spend has shifted to the cloud — leaving ample runway for AWS expansion. The stock now trades at a forward P/E of 32.8, well below its five-year average of nearly 54.
The company is also relatively exposed to potential tariff fallout, given its reliance on imported goods. Still, CEO Andy Jassy has downplayed those risks and emphasized Amazon’s supply chain resilience and pricing flexibility. With Q2 earnings expected in late July, all eyes will be on AWS acceleration and broader margin improvement.
No Longer a Pack Trade
The Magnificent Seven has splintered. Nvidia’s AI-fueled ascent places it in a category of its own, while Amazon’s fundamental strength is gradually regaining investor favor. Alphabet, meanwhile, offers value — but not without risk — as it fights to retain its dominance amid AI disruption.
For investors, the message is clear: broad baskets may no longer cut it. In today’s market, the edge lies in picking winners, not just buying acronyms.
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