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Several of the Magnificent Seven stocks didn’t perform as well as the market in 2025.
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Investors are expressing worries about the valuation of AI stocks alongside the significant investments being made in AI technologies.
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Nonetheless, there’s a strong belief that the Magnificent Seven will greatly benefit from advances in AI.
On another note, the “Magnificent Seven” stocks received a lot of buzz in 2025, but only two of them managed to surpass their broader market benchmarks, specifically the S&P 500. Toward the end of the year, concerns grew about high valuations, factors that might hinder AI development, and the substantial sums being put into AI infrastructure.
Investors often seek out underperforming stocks hoping for a recovery. So, as we head into 2026, is it time to consider buying these significant tech laggards?
Only two stocks from the Magnificent Seven—Alphabet and NVIDIA—managed to outperform last year’s market. Alphabet, which is Google’s parent company, navigated a lawsuit from the U.S. Department of Justice and concerns regarding AI competition, while NVIDIA dealt with geopolitical issues such as a halt in its operations in China.
Two consumer tech giants—Apple and Amazon—struggled considerably last year. Both were adversely affected by tariffs and the ongoing trade tensions between the U.S. and China, which led to inflated tariffs on both sides.
Apple primarily produces its iPhones in China but has started shifting production to India and Vietnam, though tariffs from President Trump also affect these countries. Similarly, a lot of Amazon’s products, especially those sold by third-party sellers, are made in China.
From a more individual perspective, investors have been disappointed in Apple’s minimal AI strategy, unlike the other Magnificent Seven stocks which are making significant AI-related investments. Conversely, Amazon’s plans for close to $100 billion in capital spending, primarily on AI investments, have led to uncertainty among investors about the speed and effectiveness of these investments.
Interestingly, Apple’s caution regarding heavy AI capital investments turned out to be a plus towards the end of last year, as investors grew wary of high spending. The future of AI is a bit murky and may not follow a clear path. There’s undeniable interest, yet resource limitations could hinder infrastructure expansions needed to meet demand.
This situation opens a few paths for Apple stock to shine. If investors remain uneasy about hefty AI capital expenditures, Apple could end up performing well as it hasn’t yet committed heavily to such spending.
Moreover, it’s possible that Apple will come up with a solid AI strategy and reap rewards from the market. Some analysts, like Dan Ives from Wedbush, think a partnership with Google’s language model Gemini might yield substantial licensing fees.
There’s a chance that the current administration could ease tariffs or expand exemptions this year, which would aid companies like Amazon. With Amazon’s heavy investments in robotics and automation, especially in their warehouses, many analysts see potential growth that the market may not fully recognize yet.
Morgan Stanley’s analyst Brian Nowak mentions that Amazon could achieve up to $4 billion in annual savings by 2027 if they indeed launch 40 next-generation robotic warehouses by then. This may just be the start of efficiencies driven by automation.
Amazon also leads the cloud market and is evidently benefiting from AI. Currently, its stock is trading at 35 times its trailing 12-month P/E ratio, which is significantly lower than its five-year average.
In conclusion, I think investors might find value in two of the laggards from the Magnificent Seven. There’s a certain level of safety in these companies due to their significant revenue and free cash flow, not to mention that they’re not solely reliant on AI.
Before jumping into Apple stock, it’s worth considering a few points:
Our analyst team has pinpointed some stocks they see with better potential right now, and oddly, Apple isn’t on that list. These alternatives could deliver impressive returns in the coming years.
To give you an idea, if you had invested in Netflix back when the recommendation came out in 2004, your $1,000 investment would have turned into $487,089! And if you had put money into Nvidia back in 2005, you’d see a remarkable return as well.
It’s important to note that the stock advisor platform has averaged a 970% return compared to the S&P 500’s 197%, showcasing clear market outperformance.
This all suggests that while the allure of some stocks remains, investors should stay alert and perhaps consider other avenues.
