3.24 Billion Reasons to Ignore “The Magnificent 7”

The “Magnificent 7” has performed admirably over the last year, but as these tech stocks provided shaky results lately, there’s a factor to consider.

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It’s official. If you were to put the “Magnificent 7” all together, they would be worth as much as all the stocks in Japan, France, and the United Kingdom put together. Never mind Canada, where our largest company by market capitalization, Royal Bank of Canada (TSX:RY), holds a market cap of just $182.83 billion as of writing.

Given these Magnificent 7 each has a trillion-dollar market cap, we’re not even close.

But there are reasons to get away from the Magnificent 7. In fact, I can give you 3.24 billion of them.

We’re not equal

The world is a very unequal place, and we’re not even close to becoming equal. In fact, despite the massive scale of the Magnificent 7, there are still quite a few markets where the company cannot penetrate. In fact, it won’t be able to for at least the near future.

Why? Because 40% of the world still does not have access just to the internet. That means there are currently 3.24 billion people in the world who aren’t able to interact with these companies even slightly. This was identified as a huge problem by Deutsche Bank in a recent report.

Granted, this also means there are opportunities as well. Should these companies put pressure on governments to expand infrastructure, then sure, the Magnificent 7 could see even more growth! But that’s a huge “if” and one that would mean a lot of expense.

Other areas of growth to look to

This being said, there are other areas of growth where investors could look to. These companies are all heavily invested in the growth of artificial intelligence (AI) in more ways than one. Whether it’s creating their own AI services, or supporting the growth of the product, these companies should see a huge boost.

In fact, these AI stocks could do well given that AI is set out to be the next internet, but far easier to use and with far less infrastructure investment. So, with faster and more opportunities in the future for these companies, it does look likely that there are growth opportunities ahead.

Yet, of all of them, there really is just one that I would focus on. Whether it’s creating more growth in countries without the internet or the surge of AI, it’s set for absurd growth over the next few years.

Bullish on Nvidia stock

Of all these companies, NVIDIA (NASDAQ:NVDA) certainly has the most promise. It’s not banking on rising ad revenue or more usage of its products. That usage is in the books and only rising higher in demand. AI is in its infancy, and it’s going to take even more semiconductor chips to see it through to its full potential.

What’s more, NVIDIA stock continues to make faster and better products for companies and countries to consider. The only downside in the future is if the tech stock faces supply-chain problems. For now, however, that looks like an “if” we don’t have to worry about.

But even more than this, should countries around the world see internet infrastructure built, Nvidia stock is likely to be one of the main benefactors here as well. To expand, countries will need these chips. And Nvidia stock remains the top provider.

So, while the Magnificent 7 have performed magnificently over the last year, many remain quite risky in the near term. Yet for Nvidia stock, whether it’s long or short term, there is even more room to run for this top stock.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has positions in Royal Bank Of Canada. The Motley Fool recommends Nvidia. The Motley Fool has a disclosure policy.

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