It’s hard to follow the stock market without hearing about the Magnificent Seven stocks. This group of publicly traded corporations have delivered exceptional returns for long-term investors. Many of these companies still exhibit double-digit year-over-year (YOY) revenue growth and have multiple opportunities to gain market share.
These stocks make up large portions of the S&P 500 and the Nasdaq Composite. Most of those indices’ gains come from those seven stocks, and this becomes even more apparent if you look at the Roundhill Magnificent Seven ETF (NASDAQ:MAGS). The fund has delivered a 46% year-to-date (YTD) return which comfortably outperforms the two indices.
The MAGS ETF only contains the Magnificent Seven stocks, but some Magnificent stocks are more magnificent than others. Some stocks remain on that list due to past successes even though future growth opportunities look hazy. Luckily, these Magnificent Seven stocks look ready to live up to expectations and deliver long-term returns for investors.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) has consistently outperformed the stock market. Shares are up by 34% YTD, more than tripling over the past five years. The stock has rising financials, a relatively good valuation and a recently instated dividend.
Many businesses turn to online advertisements to get in front of targeted customers. While companies have many options, few online advertisers offer the same targeting capabilities and reach as Alphabet. Google and YouTube are two of the most popular websites on the web, and they offer plenty of opportunities for advertisers.
Moreover, ad demand continues to grow as Alphabet reported 15% YOY revenue growth in Q1 of fiscal year 2024. Notably, Google Cloud revenue now makes up more than 10% of Alphabet’s total revenue. Google Cloud is growing at a faster rate than online advertising, and that can translate into higher revenue growth numbers in the future. Also, Alphabet increased its net income by 57% YOY as cost-cutting measures start to pay off.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) dominates in numerous industries. The company got started with its online marketplace which now generates billions of dollars in sales each quarter. The Amazon online marketplace was a main driver for the company’s 13% YOY revenue growth in the first quarter. Net income more than tripled YOY to reach $10.4 billion.
And, the tech giant isn’t only winning in e-commerce. Amazon is the largest cloud provider, with Amazon Web Services (AWS) growing by 17% YOY to reach $25.0 billion. Advertising, groceries and streaming are some of the company’s additional verticals that are generating impressive growth.
Moreover, Amazon delivers solid gains for long-term investors. Shares are up by 30% YTD, almost doubling over the past five years. Although those gains have been enough to beat the S&P 500, Wall Street analysts believe that the stock has more room to run. It’s rated as an unanimous Strong Buy among 42 analysts with a projected 14% upside.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is another Wall Street favorite. It’s rated as a strong buy with an estimated 10% upside. The highest price target of $600 suggests that Microsoft can rally by an additional 32%. It’s no surprise that analysts are bullish given the stock’s 23% year-to-date gain and 5-year gain of 227%.
However, historical gains aren’t the only factor driving optimism. Microsoft thrives in multiple industries. It has a strong presence in cloud computing, artificial intelligence (AI), business software, gaming, advertising and other verticals. Microsoft reported 17% YOY revenue growth and 20% YOY net income growth in Q3 FY24.
MSFT Cloud has been a major catalyst for several years, now making up over half of the company’s total revenue. The segment grew by 23% YOY, bringing in $35.1 billion of the company’s $61.9 billion in total revenue. Microsoft can continue to ride AI tailwinds to reach new highs and reward long-term investors.
On this date of publication, Marc Guberti held long positions in GOOG, AMZN, and MSFT. 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.
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