“Magnificent Seven” in modern times is a repurposed term of the Western movie in the 60s of the same name. Instead of gunmen, Magnificent Seven refers to the mega-cap stocks in the tech-heavy Nasdaq Composite Index in the U.S.
In order of market capitalization, as of April 11, 2024, they are Microsoft, Apple, NVIDIA (NASDAQ: NVDA), Alphabet, Amazon.com, Meta Platforms (NASDAQ: META), and TESLA (NASDAQ: TSLA).
Only Microsoft has a market cap of over US$3 trillion, and only electric carmaker Tesla is below US$1 trillion. If share prices are not a consideration, the best “magnificent stocks” to buy in April are NVIDIA and Meta Platforms. Besides the surging prices, their core businesses have long growth runways.
Blockbuster investment
On Friday, February 23, 2024, NVIDIA’s market cap crossed US$2 trillion for the first time during intraday trading. At the close of trading on April 11, 2024, it was US$2.26 trillion. It’s the third publicly listed American company, after Microsoft and Apple, to join the exclusive $2 trillion club.
NVDA trades at US$906.16 per share and is up 82.99% year to date. The trailing one-year price return is 228.67%. But why invest in this chip stock? Many market analysts describe it as a blockbuster investment today because of its phenomenal revenue and profit growth.
In the fourth quarter (Q4) of fiscal 2024 (three months ending January 30, 2024), revenue and net income soared 265% and 491% to US$22.8 billion and US$12.84 billion versus Q4 fiscal 2023 (GAAP). For the full fiscal year, revenue and net income grew 126% and 581% year over year to US$60.92 billion and US$29.76 billion.
NVIDIA’s founder and chief executive officer (CEO) Jensen Huang said in fiscal 2023 that artificial intelligence (AI) is at an inflection point and is prepped for broad adoption in various industries. Besides the booming AI sector, NVIDIA was highly successful in graphics technology and ray-tracing technology in fiscal 2024.
The chipmaker is at the front and centre of the AI revolution. Last month, NVIDIA unveiled the Blackwell Platform to usher in a new era of computing. Its graphics processing unit architecture features six transformative technologies for accelerated computing.
“Generative AI is the defining technology of our time. Blackwell is the engine to power this new industrial revolution. Working with the most dynamic companies in the world, we will realize the promise of AI for every industry,” said Huang.
Awesome stock
Some analysts say Meta is an awesome stock. The US$1.33 trillion company dominates the social media sector with Facebook, Instagram, WhatsApp, Threads, and Messenger platforms. At $US523.16 per share, current investors enjoy a 47.96% year-to-date gain.
Good news came on February 1, 2024, when META announced that it would start paying quarterly dividends (US$0.50 per share) and authorized a US$50 billion buyback. In 2023, revenue and net income increased 16% and 69% year over year to US$134.9 billion and US$39.1 billion.
Meta is also spending billions on AI initiatives and is a significant player in the generative AI space. It unveiled its new second-generation chip for AI workloads.
Avoid taxes
NVIDIA and META’s growth trajectories are unstoppable. Canadians investing in the two Magnificent Seven stocks should hold them in their Registered Retirement Savings Plans to avoid the 15% withholding tax on foreign investments.
