As you can see in the table below, “The Magnificent 7” mega-cap stocks have posted incredible 10-year returns. However, there have recently been some big changes in the market (e.g. interest rate expectations) and to these seven businesses in particular (e.g. maturation, dividends, AI and more). In this report, we provide an update to our January rankings of the Magnificent 7 stocks, with a special focus on Amazon (AMZN) (including its business, four big growth drivers, valuation and risks). We conclude with our strong opinion on investing in Amazon (and each of the Magnificent 7) for the remainder of this year (and beyond).
Alphabet, Big Risks: Bing AI, Apple DOJ, Meta-Like Spending
Alphabet (GOOGL) shares are up a measly 7.9% this year, and up 10.8% over the last two-years. That may not sound too bad, but compared to other mega-caps like Microsoft (MSFT) (+14.2% ytd, +45.9% 2yr) and Meta Platforms (META) (+44.1% ytd +141.2% 2yr), Alphabet has been lackluster (and some investors worry it’s increasingly going the way of Apple (AAPL) (-10.4% ytd). In this report, we review Alphabet’s business, its big risks (e.g. AI threats, challenges from being enormous, high spending) and its current valuation. We conclude with our strong opinion on investing.
Google Earnings Note
Quick Note: Google released earnings after the close. Here are two quick observations: (1) Cloud is smaller than Amazon Web Services and Microsoft Azure, and a smaller part of Google's business, but still Growing Fast! (see table). (2) Google is Rapidly Accelerating spending on Artificial Intelligence (currently categorized in "Unallocated Corporate Costs") (see table 2).
Google Stock: Market Puking
Stalwart, blue-chip, US stock market juggernaut, and Google parent, Alphabet (GOOGL), made a new 52-week low this week. This is a company that has over 10% revenue growth, a seemingly insurmountable ecosystem and moat, and now trades at only 10 times forward EV to EBITDA. In this report, we review Google’s business model, revenue growth, capital allocation, current valuation and big risks. We conclude with our strong opinion on investing.