Buy This, Not That: Your Mid-Year “Magnificent 7” Investing Guide

Shah Gilani|June 21, 2024

They’re the titans of tech, the juggernauts of the market.

But are all of the Magnificent Seven still worthy of their crown?

Some are as sizzling as the sun-soaked Palm Desert, California (where I’m recording this week)…

But others need to be put on ice.

We’ve got trillion-dollar behemoths, eye-popping profit margins and growth rates that’ll make your head spin.

As we hit the mid-year point… which are Buys and which are Not?

You’ll have to watch today’s episode to find out.

Click on the thumbnail below to dive in.

TRANSCRIPT

Hey, everybody. Shah Gilani coming to you from the very warm Palm Desert, California, where the temperature is supposed to get to 110 degrees. It got up to 106. But it’s a dry heat.

I’m going to hit the Magnificent Seven because, well, they are magnificent… but not all of them.

First up… you know what it is.

I’m going start with the big one. Nvidia (NVDA).

It’s a Buy. Leave it at that.

It is now the most valuable company on earth. It has $3.4 trillion of market capitalization. Holy mackerel!

• It makes $80 billion in revenue.
• Profit margins are 53.4%.
• Quarterly revenue growth, year over year, is 262%.
• Quarterly earnings growth, year over year, is 628%.

Need I say more?

Just so you know what you missed… five years ago, the stock was trading at $5. Two years ago, it was trading at $16. A year ago, it was trading at $40 a share.

Now it’s close to $140.

Buy it.

Don’t bother looking at it. Don’t get nervous about it coming down, because it’ll eventually go back up… and keep going up. It’s the most valuable company on earth for a reason.

It makes the most valuable chips that everybody wants.

Will it be always the leader in that? No, but it got a heck of a head start.

So the stock can double even from here. Buy it. If you’re weak-kneed, put a stop in. And/or buy more lower if we get a good dip, which I hope we do.

Nvidia is a Buy. It’s going to be a Buy for as long as I can see.

Next up is Apple (AAPL). You know what I’m talking about. Guess what? Not so much of a Buy. I know it had a heck of a comeback this year after being knocked down… for good reason. It was due mostly to weak iPhone sales in China.

But I don’t think the stock is a buy here, and I’ll tell you why.

Yes, it has $3.3 trillion-plus market cap… $381 billion in revenue… and profit margins of 26%-plus.

Fantastic. Here’s what I don’t like…

The second fiscal quarter earnings that just came out a little while ago…

Results were higher than expected, but they were down in a lot of respects. Revenue was down 4%. iPhone sales down 10%. Not the stuff you really want to hear.

The talk of AI incorporation at the company’s developer conference is what exploded the stock higher. Now, the stock had been working its way higher in anticipation of AI being incorporated into the whole entire Apple ecosystem – the smartphone, of course, but everything else too.

Investors were bidding up stock, and then the developer conference came. Tim Cook came out and did a pretty darn good job wowing everyone, and the stock popped.

But what I don’t like about the stock popping is this stock now has, not exactly a gap, but it’s had a tremendously big move. And I think it’s going to come back and fill that move.

Apple’s recent intraday high was $220. The high close was $213.

It’s trading around there right now. So, yes, it looks really strong, but I’m a little concerned.

The $110 billion share buyback program announced in the earnings report was what really solidified people running back into Apple. So there’s going to be a bid under the stock to the tune of $110 billion.

And by the way, that figure is up 22% from last year’s buyback program.

So lots of money coming from Apple to buy its own shares back. That will create a base… but it doesn’t mean the stock is going to go straight up. It means if the stock comes down, they’re going to buy more.

And if the stock goes up, they’re going to buy more too. They’re not going to wait. But the comedown is going to create a base. I prefer to wait for Apple to come down.

If you own Apple, make sure you have a stop in there if you’re nervous about it coming down. Or if you really like it long term, then just leave it. But if you’re thinking about picking up some shares here, then I say no. I wouldn’t buy it here.

To me, it’s a wait. I’d wait for it to get down to the $185-$190 range… then buy it down there.

Next up is Microsoft (MSFT), one of my favorite companies because everything they do, they do really well.

It’s a $3.3 trillion company. Again, another behemoth. It’s got $236 billion in revenue. Profit margins of 36.43%. That’s why I love Microsoft.

Five years ago, you could have bought Microsoft for $155 a share. Ten years ago, you could have bought for $35 a share. A year ago, you could have bought it for $335.

It’s now trading at $443. I say it’s a Buy, because it’s goingn to keep going up.

It might have a few bumps here and there with the market, but if the market continues to go up, Microsoft’s going to go up with it.

They’re incorporating AI… and it’s going to monetize itself very easily straight down to the bottom line. AI is going to be nothing but a mega grand slam for Microsoft.

Microsoft is a Buy.

Next up… Google (GOOG).

I like Google. Is it my favorite right now? No. I think it could come down.

It’s trading around $170. I think it could drop down to the $140s. I would wait if you don’t own it. Wait to see if it comes down.

The market’s been strong – very strong – making new highs all the time, but we haven’t had any kind of correction. And what’s going cause a correction is probably some kind of black swan event. We know interest rates, we know what they’re doing for the most part. If we see a surprise, interest rates heading back up, then we could see some profit taking. But we haven’t had a correction, and that always worries me. I’d like to see some of the dead brush cleared out so we don’t get a wildfire. So be careful with that.

Google is a Buy… but I would like to buy it lower.

The company is still about ad spending. Its AI monetization is going come along beautifully. Google is about the cloud, about AI spending, AI spending in the future and what they’re going do with it.

But the AI impact on Google is slow-going. They’re not going to be able to monetize as quickly as, say, Apple, if Apple does get its act together on that, and Microsoft, which has its act together.

Google has 26% profit margins. I really like it; it’s making new highs… but I’d rather wait a little bit on Google and see if I can buy a little bit lower.

Amazon (AMZN)’s a Buy, but it’s not going to be one of those high flyers. Amazon’s just a different breed. Obviously, it’s a mega cap at just shy of a $2 trillion market cap.

Profit margin is 6.38%. That’s what makes it a different animal. It’s a different business.

Is it great? Yes. Does it have the cloud? Yes, it does. Is that going to be the be all end all for them?

No, but it’s going to be the driving force. Because Amazon – which has been way into AI longer than anybody realizes – is going to continue to lead on the AI front on lots of levels.

So I do like Amazon.

It’s going be a slow mover, but it’s definitely a Buy.

It’s trading around $185. Its quarterly revenue growth, year over year, is 12%-plus. That’s fantastic for a company that is as big as that and does what it does. It’s fantastic.

Quarterly earnings growth, year over year, is 228%. Amazon, it’s a Buy.

Meta (META), good old former Facebook. That was a screwup, wasn’t it? Meta. Let’s change the name to Meta because the future is about the metaverse.

No. The future is about AI.

Mark Zuckerberg gets it wrong, but he fixes his mistakes and gets things right. Sometimes it takes a little time. Sometimes he’s right on it. He’s pretty much been on it, kind of casting aside the whole metaverse theme he wanted to turn the company into, and he’s now moving hard. I think he’s going to do a good job because he’s a very smart guy. Figures out and fixes his problems really quickly.

Meta is a Buy… but it’s got some problems, including in China.

The stock is trading around $500. I think it could come down. Let’s say the market tumbles. A tumble’s now 5% to 10%. Twenty percent would be a gift for us because if you’re listening to me, you know I’m looking to buy dips.

But as far as Meta goes, I think it could come down $400. I wouldn’t buy it up here. I wouldn’t chase it up here. I would look for it to come down.

If you own it, don’t do anything. You hang on to it, make sure you have your stops in there, take your profits, and buy lower if it goes lower. But I think it can get down $400, in which case I am a buyer.

Last but not least, Tesla (TSLA).

Tesla has been on my radar for crap stocks for some time. It’s going to continue to struggle. Good old Tesla is at best a tech company and at worst a car company. If it’s a car company, it’s doing really well because its margins are really good. If it’s a tech company, it’s not doing well for lots of reasons.

We know Elon Musk is the “be all, end all.” Did he deserve his pay packet? Absolutely. That was the deal, and he absolutely deserved it. He created that much value. Elon, good for you. I’m glad you got what you deserve.

The stock is trading at around $181. Here’s what I don’t like…

• Quarterly revenue growth, year over year, is down almost 9%.
• Quarterly earnings growth, year over year, is down 55%.

Can’t get excited about that. It’s going to be hard for Tesla to make money.

It’s not a Buy here. I’m going to see what happens with it and maybe look to buy it lower. But right now, I’ve got better places to put my capital.

And if you’re thinking about buying Tesla now, the answer is Not.

That’s it for this week. I’ll catch you guys next week. Cheers, everybody. Be safe out there.