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The Magnificent 7 stocks stood head and shoulders above the rest last year. These powerhouse stocks helped the S&P 500 notch fresh highs in 2023, with the index delivering more than a 20% gain.
However, despite a strong first half of 2024, these stocks have been trading in the red in recent weeks. Following an incredible rally over the past several months, I’m sure many had expected the stock market to take a breather. Nevertheless, the pullback calls for a moment of reflection for investors, who should place their bets on the Magnificent 7 stocks having the most prolonged growth potential.
In doing so, here are three Magnificent 7 stocks that offer the most potential for sustained long-term gains ahead. These three stocks contributed billions to the stock market’s gains in the past year and have proven incredibly lucrative over time.
Apple (AAPL)
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Most, if not all, Magnificent 7 stocks are ticking in the green this year again, but that’s not the case with Apple (NASDAQ:AAPL). AAPL stock is down more than 9% this year, with several headwinds weighing down its underlying business. Demand for its products is down, particularly in China, while it looks to navigate an antitrust lawsuit from the U.S. Department of Justice. Nevertheless, the current drop in its price, makes it an excellent ‘buy-the-dip’ candidate, especially with its upcoming generative AI innovations.
Though it has been relatively sluggish in the AI realm, Apple has the potential to catch up and then some. All eyes will be on its annual Worldwide Developers Conference, set for June this year, likely to include multiple AI product announcements. In February, Apple CEO Tim Cook discussed the company’s significant investment in AI, promising a major AI-related announcement this year.
Meta (META)
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Meta (NASDAQ:META) emerged as one of the top-performing stocks last year, gaining an eye-catching 145%. Its pivot from the metaverse to AI and its effective belt-tightening measures resulted in Meta’s stellar operating performance last year. It surpassed analyst estimates across both lines by handsome margins in each of the four quarters last year.
Its fourth-quarter (Q4) results show a superb 25% bump in sales on a year-over-year (YOY) basis to $40.11 billion, while it more than tripled its net income. Moreover, it ended Q4 with daily active users up 8% YOY to $3.19 billion, with monthly active users jumping 6%. Also, it initiated its first dividend and repurchased a hefty $6.32 billion in shares in Q4.
As we advance, AI will continue to be a major growth catalyst for Meta as it seamlessly layers the transformative technology across its Family of Apps and its hardware products. Moreover, CEO Mark Zuckerberg has indicated plans to spend billions on microchips from Nvidia (NASDAQ:NVDA) and its peers this year to develop responsible open-source general intelligence in the long term.
Nvidia (NVDA)
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It’s tough to discuss AI without mentioning semiconductor giant Nvidia. Its cutting-edge GPUs accelerate the most demanding AI algorithms, positioning the company as a cornerstone in the industry. Moreover, its comprehensive hardware and software stack empowers developers to innovate faster. With AI’s disruption unlikely to stop anytime soon, Nvidia and its investors will continue to reap the rewards for years to come.
Nevertheless, after a couple of years of roughly 300% gains, it’s not too hard to imagine why investors are feeling iffy. Consequently, we’ve seen NVDA stock taking a hit in the past few weeks, down almost 5% from its all-time high of $950. However, despite the lofty price tag, Morgan Stanley analysts like Joseph Moore continue to champion the stock with it currently in correction territory. He raised the price target for NVDA stock to a parabolic $1,000, a testament to its massive long-term growth trajectory.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.
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