The Magnificent 7—Microsoft, Apple, Alphabet, Nvidia, Amazon, Tesla, and Meta—have driven the market higher for years now. These companies aren’t just riding the waves of trends like AI, cloud computing, and electric vehicles; they are shaping them. Their dominance has propelled stock indices to new heights. But it is their quality that has made them core holdings for long-term investors.
But at the moment, the party is on pause. A sharp pullback across the board, led by Tesla’s brutal 41% drop, has knocked each of these names off their all-time highs. As core holdings for most investors, whether through index funds or individual stocks, pullbacks in quality names like these should be viewed as opportunities. It would be foolish to think these industry giants have suddenly lost their edge. History has shown that pullbacks in great businesses are gifts.
That said, we’re not just looking for a quick bounce. We’re looking for compounders at prices that make sense. This begs the question: Which of these stocks now offers the most compelling value?
To answer that, let’s explore these company’s across several fundamental and qualitative metrics to figure out where the real value lies for those focused on long-term winners.
Magnificent 7 Comparison Snapshot
The following table displays the data relevant to illustrate the comparison among the Magnificent 7 companies:
Before jumping into the rankings, note that the figures above are based on calculated reported adjusted figures for better comparability. This is with the exception for the ROIC figures which I have adjusted by capitalizing R&D expenses. This better encapsulates the effect of R&D on reinvestment. The implied growth rates are calculated using a reverse DCF. In the reverse DCF, FCF figures do not include stock based compensation and equity value per share does not account for future share buybacks.
Best Value to Worst: The Magnificent 7 Ranked
1. Alphabet Inc. (GOOG)
Alphabet is the dominant leader in search and video (Youtube) generating a significant amount of its revenue from advertising. Increasingly, the business is being bolstered by advancements in artificial intelligence and cloud computing. After a 19.5% pullback, it stands out as the most compelling value among the Magnificent 7, trading at a discount to its historical norms.
Financial and Valuation Metrics
- Stock Price: $172
- Pullback from ATH: 19.5%
- FWD P/E: 19.2x (24x 5-year average)
- FWD EV/EBITDA: 15.8x (17.5x 5-year average)
- 5-Year Revenue Growth CAGR (2019-2024): 16.7% ($161.9B to $350.0B)
- FCF Growth (2024): 4.7% (18.6% 5-Year FCF CAGR)
- Implied 10-Year FCF Growth (Reverse DCF): 11.0% (9.5 WACC)
- ROIC (2024): 32.19% (32.63% 3-Year Avg ROIC)
Drivers of Potential Upside
- Search Leadership: Fourth-quarter 2024 Search revenue reached $54 billion, up 11.4% year-over-year. This was enhanced by AI features such as Overviews. With over 5 trillion annual queries, incremental improvements in ad engagement could lift margins.
- Cloud Expansion: Google Cloud generated $12 billion in Q4 2024 (21% YoY growth) and achieved a 17.5% margin. Despite the competitive nature of the industry, continued scaling should continue to drive growth in this important segment.
- Diversified Growth: YouTube is another golden goose within Alphabet. Q4 revenue rose to $10.5 billion (14% YoY). Waymo is another bet that shows promise in the autonomous vehicle space potentially emerging as the next cash flow stream for the company.
- Share Buybacks: Alphabet repurchased $62.2 billion in shares in 2024 boosting EPS and improving ROIC.
Key Risks
- Capital Expenditure Pressure: Spending increased to $52.5 billion in 2024, and management expects capex to increase to $75 billion in 2025 due to AI infrastructure spend. This should constrain FCF in 2025 potentially jeopardizing the 11% FCF target.
- Competitive Threats: Emerging AI competitors, such as OpenAI, Claude, and DeepSeek, pose risks to advertising pricing power and Search market share. This threat to Alphabet’s moat will be critical to watch.
- Economic Sensitivity: A downturn could reduce ad spending, pressuring margins and growth.
- Regulatory Risk: The U.S. Department of Justice’s antitrust ruling against Google in 2024 threatens its search dominance, particularly revenue-sharing agreements (e.g., $20 billion annually with Apple). Potential remedies could disrupt Search revenue.
Valuation Assessment and Ranking Rationale
Alphabet currently trades at a discount relative to its historical valuation multiples, with a forward P/E of 19.2x compared to a 5-year average of 24x, implying a modest 11% 10-year FCF growth rate. These valuation metrics appear well supported by Alphabet’s robust financial profile. Its impressive five-year FCF CAGR of 18.6% ($30.9 billion to $72.8 billion, 2019-2024) significantly exceeds market expectations, indicating substantial room for upside. The market is understandably cautious given rising capital expenditures, but these should be sufficiently offset by continued revenue expansion and margin improvements, driven largely by advertising resilience and growing profitability from Google Cloud. Additionally, Alphabet’s stable ROIC of 32.19% demonstrates efficient capital allocation despite substantial investments.
While the outlined risks—particularly rising CapEx, competitive AI threats, economic sensitivity, and regulatory pressures—are meaningful and require attention, these challenges appear adequately reflected in the current valuation. Alphabet’s entrenched leadership in search, combined with its significant growth opportunities in AI and cloud services, suggests that fears may be overblown. At current levels, Alphabet represents the strongest candidate for long-term value creation among the Magnificent 7, having already priced in considerable cyclical and competitive headwinds.
2. Meta Platforms, Inc. (META)
Meta has solidified its status as a top advertising platform. Now leveraging AI, the social media company is bolstering user engagement and its ad business. Post an 11.5% pullback, it offers a reasonable value case, trading near historical averages with long-term growth potential.
Financial and Valuation Metrics
- Stock Price: $623.43
- Pullback from ATH: 11.5%
- FWD P/E: 24.7x (23x 5-year average)
- FWD EV/EBITDA: 16.9x (15.2x 5-year average)
- 5-Year Revenue Growth CAGR (2019-2024): 18.4% ($70.7B to $164.5B)
- FCF Growth (2024): 21.2% (20.4% 5-Year FCF CAGR)
- Implied 10-Year FCF Growth (Reverse DCF): 12.5% (9.5% WACC)
- ROIC (2024): 33.13% (33.32% 3-Year Avg ROIC)
Drivers of Potential Upside
- AI-Powered Advertising: Meta’s Advantage+ suite achieved a $20 billion run-rate in Q4 2024 (70% YoY growth). As the company continues refinement of AI targeting, this could continue to translate into revenue growth and further margin improvement.
- Open-Source AI Leadership: Meta is well-positioned to leverage open-source large language models, which could be bolstered by its announcement to develop a competitor to OpenAI. With 700 million monthly active users on Meta AI, this strategic pivot could enhance platform capabilities and drive monetization potential.
- Emerging Platforms: Threads’ 320 million MAUs and WhatsApp’s $2 billion messaging revenue present untapped potential. There is potential for advertising on Threads to mirror Instagram’s trajectory.
Key Risks
- Capital Expenditure Escalation: Expenditures rose from $37.3 billion in 2024 to a projected $60-65 billion in 2025. This certainly has had an impact on the lower expected FCF growth.
- Regulatory Constraints: Stricter privacy regulations in the EU and U.S. could impact advertising revenue.
- Economic Sensitivity: Economic turmoil could reduce ad spending, temporarily pressuring margins and growth.
Valuation Assessment and Ranking Rationale
Meta trades at multiples largely consistent with its five-year averages; however, its current price implies a conservative FCF growth rate of 12.5%. Its five-year FCF CAGR of 20.4% ($20 billion to $52.1 billion, 2019-2024) comfortably surpasses market expectations, even with significant reinvestments. Operating margins have dramatically improved from 28.8% in 2022 to an impressive 41.5% in 2024. These improvements have been driven by AI ad targeting and disciplined operational execution. Additionally, Meta’s ROIC has steadily risen to 33.13% (2024), indicating improved capital efficiency following restructuring and strategic investment.
Despite regulatory uncertainties, elevated capital spending, and potential near-term cyclical pressures on the advertising business, Meta offers an attractive risk-reward profile. The recent 11.5% pullback provides a reasonable entry point, especially since the implied 12.5% FCF growth rate appears achievable given its robust historical performance and ongoing growth drivers. With impressive margin expansion, improving capital efficiency, and significant growth opportunities from AI and emerging platforms, Meta find itself in second place in these rankings. The company is solidly positioned as a top-tier investment opportunity for long-term value creation.
3. Microsoft Corp. (MSFT)
Microsoft blends dependable growth with leadership in cloud and AI while also supported by diverse recurring revenue streams. After a 17.4% pullback, Microsoft ranks third, offering a reasonable valuation and achievable long-term growth expectations.
Financial and Valuation Metrics
- Stock Price: $391.81
- Pullback from ATH: 17.4%
- FWD P/E: 29.7x (36x 5-year average)
- FWD EV/EBITDA: 20.9x (25.3x 5-year average)
- 5-Year Revenue Growth CAGR (2019-2024): 14.3% ($125.8B to $245.8B)
- FCF Growth (2024): 24.5% (14.1% 5-Year FCF CAGR)
- Implied 10-Year FCF Growth (Reverse DCF): 12.5% (8.5% WACC)
- ROIC (2024): 32.48% (46.43% 3-Year Avg ROIC)
Drivers of Potential Upside
- Azure Expansion: Azure maintains over 30% of the cloud market, with AI-driven workloads continuing to drive significant growth. Sustained annual revenue growth above 25% could push operating margins toward 50% which would materially benefit profitability.
- Copilot Integration: Embedding AI into Office and Teams could increase ARPU by $10-20 across 400 million users. This integration could result in meaningful growth.
- Subscription Revenue: Office 365 and Xbox Game Pass ensure stable cash inflows, potentially driving FCF and offering a buffer for economic deterioration.
- Share Buybacks: Microsoft repurchased $17.2 billion of shares in 2024, enhancing earnings per share.
Key Risks
- High Capital Expenditures: Significant CapEx of $44.5 billion in 2024 has pressured ROIC and could continue limiting FCF growth if these investments fail to translate quickly into higher profitability.
- Competitive Pressures: Persistent competition from AWS and Google Cloud poses a risk to Azure’s pricing and market share, potentially restricting margin expansion and revenue growth.
- Macroeconomic Sensitivity: Enterprise budget tightening during an economic slowdown could dampen demand for cloud and productivity services, impacting Microsoft’s short-term growth trajectory.
Valuation Assessment and Ranking Rationale
Microsoft currently trades at valuation multiples below its five-year historical averages, implying moderating market expectations for its future growth. The implied FCF growth rate of 12.5% aligns closely with Microsoft’s historical five-year FCF CAGR of 14.1% ($38.2 billion to $74.0 billion, 2019-2024), making it comfortably achievable. Revenue growth of nearly 16% in 2024, coupled with steady operating margin improvements (42.1% in 2022 to 45.0% in 2024) underscores the company’s consistent profitability driven largely by Azure’s increased scale. Although the decline in ROIC to 32.48% reflects heavy investments, including the $69 billion Activision acquisition and elevated capital expenditures of $44.5 billion (18% of revenue), these strategic moves enhance long-term growth potential. The powerful combination of Azure’s sustained expansion, strategic AI-driven integrations like Copilot, and predictable subscription revenue streams provides confidence in Microsoft’s ability to meet and exceed market expectations. Among the Magnificent 7, Microsoft ranks third as it remains a stable, dependable investment option offering attractive risk-adjusted returns after its recent pullback.
4. Amazon.com, Inc. (AMZN)
Amazon is a fascinating growth story. The company dominates e-commerce and cloud computing, yet its recent performance exposes vulnerabilities alongside its strengths. After its recent decline, the company’s valuation is reasonable given its growth potential, but hinges heavily on execution.
Financial and Valuation Metrics
- Stock Price: $199.77
- Pullback from ATH: 16.0%
- FWD P/E: 31.6x (55.6 x 5-year average)
- FWD EV/EBITDA: 17.0x (25.9x 5-year average)
- 5-Year Revenue Growth CAGR (2019-2024): 17.9% ($280.5B to $638.0B)
- FCF Growth (2024): 10.4% (17.6% 5-Year FCF CAGR)
- Implied 10-Year FCF Growth (Reverse DCF): 21.0% (10% WACC)
- ROIC (2024): 17.11% (15.13% 3-Year Avg ROIC)
Drivers of Potential Upside
- AWS Growth Trajectory: AWS maintains significant momentum, generating revenue growth of 19% YoY to reach a $115 billion run-rate. Increased AI-driven products and new chip launches (Trainium2 and Nova) could continue to benefit margins.
- Operational Efficiency: Even modest efficiency improvements like those from automation and robotics could significantly enhance retail profitability. Given the size of these operations, this could boost free cash flow by billions annually.
- Advertising Expansion: Amazon’s ad business reached $17.3 billion in Q4 2024 (18% YoY growth). Given ad margins near 40%, Amazon’s overall profitability and free cash flow will benefit from scaling this business.
Key Risks
- Capital Expenditure Intensity: Capital expenditures soared to $82.9 billion in 2024, with plans for more than $100 billion in 2025. This elevated spending compresses free cash flow and will require Amazon to drive growth to meet and exceed the market’s expectations.
- Economic Sensitivity in Retail: Amazon’s retail business operates with narrow margins which means it is vulnerable to economic downturns. A significant decline in consumer spending could hit cash flows, denting the company’s FCF trajectory.
- Supply Chain and Cost Pressures: Ongoing supply-chain constraints, including chip shortages or rising logistics costs, could disrupt AWS and retail fulfillment efficiency. This, in turn, would impact margin improvement and limit Amazon’s ability to meet market expectations.
Valuation Assessment and Ranking Rationale
Amazon currently trades at a meaningful discount relative to its historically elevated valuation. Its forward P/E of 31.6x represents a substantial reduction from its five-year average of 55.6x. While the implied 10-year FCF growth rate of 21.0% seems ambitious against its historical five-year FCF CAGR of 17.6% ($15.0 billion to $35.5 billion, 2019-2024), there are significant reasons for optimism. Revenue growth has remained robust at a 17.9% CAGR, driven primarily by high-margin segments such as AWS (currently at a $115 billion run-rate) and advertising ($17.3 billion in Q4 2024). Operating margins have substantially improved from 2.6% to 10.8%, and ROIC has risen to 17.11%, outperforming its three-year average of 15.13%. Additionally, Amazon’s expansive Prime membership base exceeding 200 million subscribers globally provides a powerful recurring revenue stream and supports margin expansion through advertising and subscription services.
Despite these positives, Amazon faces meaningful risks including elevated capital expenditures, economic sensitivity in its retail business, and ongoing supply chain pressures. CapEx reached $82.9 billion in 2024 and is projected to surpass $100 billion in 2025. This will significantly compress free cash flow and increase pressure on growth execution.
Given these factors, Amazon presents a fair valuation following a 16.0% pullback. The company’s implied 21% FCF growth rate, although challenging, is achievable if AWS and advertising segments continue their strong growth trajectories. And so, Amazon represents an attractive, but execution-dependent investment opportunity ranking 4th on the list.
5. NVIDIA Corp. (NVDA)
Nvidia leads the AI chip market with extraordinary growth. However, despite its nearly 25% pull back, Nvidia ranks 5th, balancing its elevated valuation, cyclical nature, but impressive growth profile.
Financial and Valuation Metrics
- Stock Price: $111.24
- Pullback from ATH: 24.5%
- FWD P/E: 25.0x (49.2x 5-year average)
- FWD EV/EBITDA: 33.1x (49.67x 5-year average)
- 5-Year Revenue Growth CAGR (2019-2024): 64.2% ($10.9B to $130.5B)
- FCF Growth (2024): 125.2% (70.1% 5-Year FCF CAGR)
- Implied 10-Year FCF Growth (Reverse DCF): 23.0% (12% WACC)
- ROIC (2024): 144.78% (134.50% 3-Year Avg ROIC)
Drivers of Potential Upside
- Blackwell Demand: Nvidia’s recent launch of the Blackwell chip line significantly boosted Data Center revenues to $35.6 billion in Q4 2025 (up 93% YoY). Continued robust demand could drive revenue, further sustaining elevated cash flow growth.
- Expanding Software Revenue: Nvidia’s CUDA and AI platform revenue has reached a $2 billion run-rate. Given software’s high margins (over 80%), scaling this segment could substantially enhance profitability and FCF generation.
- Market Expansion and Innovation: Innovations like the H200 GPU and Spectrum-X networking solutions are positioned to support continued growth in Data Center revenue. This, again, makes the market’s FCF expectations achievable.
Key Risks
- Cyclicality of the Semiconductor Business: Semiconductors have traditionally been prone to economic downturns. For Nvidia, this could reduce enterprise and hyperscaler spending, and upend the growth expectations priced into the Nvidia.
- Geopolitical Exposure: As a result of export control, Nvidia’s China sales have been cut in half. Further potential revenue disruptions could meaningfully impact margins and the high-growth expectations embedded in its valuation.
- Emerging Competition: Advances like DeepSeek’s cost-efficient model could reduce GPU demand. This would threaten both growth and margins which would be particularly detrimental given the high implied growth expectations.
Valuation Assessment and Ranking Rationale
Nvidia’s forward P/E of 25.0x and implied 10-year FCF growth rate of 23.0% are well-supported by its soaring financial trajectory. Revenue has surged at a 64.2% CAGR over five years, reaching $130.5 billion in 2024 from $10.9 billion in 2019. This trajectory clearly reflects the company’s dominant position in the AI semiconductor space. Equally impressive is Nvidia’s free cash flow growth, with a five-year CAGR of 70.1%, rising dramatically to $60.9 billion in 2024 alone. “Insane” GPU demand and its software offering have allowed operating margins to expand significantly from 33.5% in 2022 to 66.5% in 2024. This has allowed Nvidia’s ROIC to skyrocket to 144.78%. These returns are more a result of growth, but also a demonstration of capital efficiency despite substantial investments in R&D and infrastructure.
While these metrics appear to justify Nvidia’s premium valuation, its ranking on the list accounts for the high expectations against the inherent cyclicality of the semiconductor industry. Potential challenges include the impact of geopolitical tensions, especially regarding export controls that have already halved Nvidia’s China revenues. Rising competition and the concentration of demand from the very companies on this list should not be ignored either. Maintaining the expected growth trajectory will require sustained innovation and flawless execution. Thus, Nvidia remains a compelling investment characterized by exceptional profitability and robust growth potential. Some caution is warranted for the reasons mentioned.
6. Apple Inc. (AAPL)
Apple remains a stable leader in tech, but its modest 8.5% pullback and slowing revenue growth raise caution flags. It ranks sixth, trading at premium multiples without clear catalysts to justify them.
Financial and Valuation Metrics
- Stock Price: $238.16
- Pullback from ATH: 8.5%
- FWD P/E: 32.5x (32.5x 5-year average)
- FWD EV/EBITDA: 25.3x (25.4x 5-year average)
- 5-Year Revenue Growth CAGR (2019-2024): 8.5% ($260.2B to $391.0B)
- FCF Growth (2024): 9.26% (13.0% 5-Year FCF CAGR)
- Implied 10-Year FCF Growth (Reverse DCF): 11.5% (9% WACC)
- ROIC (2024): 55.73% (61.14% 3-Year Avg ROIC)
Drivers of Potential Upside
- Apple Intelligence: Given record iPhone upgrades in Q1 2025, AI appears to have sparked demand enhancing revenue stability.
- Services Growth: Apple’s Services segment reached a $100 billion run-rate (14% YoY) and more than 1 billion active subscriptions. Growth in this business could continue to drive margin expansion.
- Emerging Market Strength: Rapid expansion and record sales in markets such as India offer potential offsets to weaker regions and drive revenue growth.
- Share Buybacks: Apple repurchased $110 billion of shares in 2024, significantly reducing share count and contributing directly to EPS growth and shareholder returns.
Key Risks
- China Exposure: A notable 11% drop in revenue from China in Q1 2025 could persist. This negatively impacts total revenue and drives downward pressure on future cash flows.
- Regulatory Headwinds: Regulatory scrutiny, particularly concerning Google’s revenue-sharing agreements (approximately $20 billion annually) and App Store practices may impact Apple’s Services growth and overall profitability.
- Innovation Concerns: Any slowdown in Apple’s innovation pipeline, aside from incremental AI upgrades, risks less desire for iPhone upgrades. Being Apple’s largest revenue line, revenue growth would certainly continue to suffer.
Valuation Assessment and Ranking Rationale
Apple’s current valuation metrics (forward P/E of 32.5x and implied 10-year FCF growth rate of 11.5%) align closely with historical averages. However, they appear to provide limited comfort given the underlying deceleration in revenue growth (2% growth in 2024, -2.8% in 2023). Management’s disciplined capital allocation through extensive share buybacks ($110 billion in 2024) and a shift toward higher-margin Services (reaching a $100 billion annual run-rate) have helped maintain operating margins (31.8%). This has driven impressive ROIC (55.73%). Despite these positives, Apple’s premium valuation remains a concern without stronger revenue growth catalysts.
Apple’s modest pullback so far does little to mitigate the concerns over slowing top-line growth. There are few catalysts on the horizon to meaningfully accelerate future cash flows. For these reasons, Apple ranks 6th among the Magnificent 7. Investors should remain cautious as Apple may struggle to reach the market’s high expectations if clear growth drivers fail to materialize.
7. Tesla, Inc. (TSLA)
Tesla leads the EV industry with groundbreaking innovation that has pressured the industry. However, its lofty valuation continues to depend heavily on speculative future prospects like Full Self-Driving and Optimus robotics rather than solid financial fundamentals. Even after a significant pullback (+40%), Tesla’s valuation appears dependent on future revenue streams coming to fruition.
Financial and Valuation Metrics
- Stock Price: $261.75
- Pullback from ATH: 41.6%
- FWD P/E: 92.1x (71.5x 3-year average)
- FWD EV/EBITDA: 64.0x (50.4x 3-year average)
- 5-Year Revenue Growth CAGR (2019-2024): 31.8% ($24.6B to $97.7B)
- FCF Growth (2024): -17.9% (29.8% 5-Year FCF CAGR)
- ROIC (2024): 9.3% (19.2% 3-Year Avg ROIC)
- Implied 10-Year FCF Growth (Reverse DCF): 51.5% (13% WACC)
Drivers of Potential Upside
- EV Volume: Cybertruck’s production ramp and Model Y’s leadership could push deliveries past 2 million annually.
- Energy Storage: Tesla has deployed 14.7 GWh in 2024 (125% YoY) at 30%+ margins. This business could scale to drive revenue growth and would diversify cash flows.
- FSD and Robotics: Full Self-Driving and Optimus (robotics) are the technologies driving optimism around Tesla. These businesses could drive growth and diversify revenues with FSD potentially offering high margins (+80%).
Key Risks
- Capital Expenditures: $11.3 billion in 2024 constrained FCF to $3.5 billion. Further increases without results could continue to erode margins and ROIC.
- Margin Erosion in EV Business: Ongoing price cuts and competition in Tesla’s core EV business could reduce margins to or below the industry average which would severely limit FCF growth potential.
- Regulatory Delays: FSD legal hurdles could delay revenue realization; though, the political environment may favor Tesla.
Valuation Assessment and Ranking Rationale
Tesla’s current valuation metrics (P/E of 92.1x and implied 10-year FCF growth rate of 51.5%) depend heavily on future technology assumptions. As a result, its valuation contrasts with its current financial realities. This can be seen in the recent financial performance, including near flat revenue growth and declines in FCF in 2024.
The valuation relies heavily on ambitious growth in EV production, energy storage, and unproven revenue streams like FSD and robotics. Weakness in EVs as well as rising capital expenditures ($11.3 billion in 2024) has put pressure on margins (operating margins down from 16.0% in 2022 to 7.8% in 2024) leading to the declines in FCF and have caused a substantial drop in ROIC (9.3%).
Despite a 41.6% pullback, and given this backdrop Tesla remains the least compelling investment within the Magnificent 7. While there is great potential for the emerging endeavors within Tesla to dramatically drive growth, at its current valuation, this is a requirement.
Final Thoughts
For long-term investors, pullbacks among the Magnificent 7, which are high-quality, market-leading companies, should be perceived as opportunities. With one exception, these companies continue to demonstrate durable competitive advantages and an exceptional ability to compound value over decades. Valuation, in this context, serves as a lens through which we can assess whether current prices align with the qualities and long-term growth potential of these giants.
This analysis highlights Alphabet and Meta as particularly attractive. These companies appear to offer the most compelling opportunities among their peers. Both companies possess resilient competitive advantages, healthy financial metrics, and growth prospects that support exceeding the market’s expectations. Microsoft follows closely, combining dependable stability and consistent execution to form a reliable foundation for a portfolio. Apple, despite its premium valuation, remains a strong compounder, although investors should acknowledge slowing growth that lacks clear near-term catalysts.
Nvidia and Amazon represent intriguing yet nuanced opportunities. Expectations are high, but achievable if discipline and execution are achieved. Tesla, in contrast, remains the more speculative option, with high expectations that currently exceed its fundamental strength and elevate risk.
For the first time in a while, it feels like valuations are relevant. Understanding the market expectations using implied growth seems particularly useful providing clarity for long-term investors to identify reasonable valuations. With this approach, Alphabet, Meta, and Microsoft present the most attractive opportunities, reflecting the principle that quality compounders bought at reasonable prices are the foundation for successful investment.
Disclosure: I hold a long equity position in Alphabet, Amazon, and Nvidia.
