If you’re a Canadian investor who’s given into the home-country bias, you may be overexposed to TSX stocks and underexposed to some of the best-in-breed artificial intelligence (AI) winners out there, most notably the Magnificent Seven stocks. Indeed, the relative outperformed of the Magnificent Seven has been quite pronounced, with some calling for the group to slow down while the rest of the stock market catches up.
Either way, I think the Magnificent Seven is a group of companies that probably won’t slow down anytime. Not while they’re continuing to pour large sums of cash into AI projects, many of which could start pulling in sizeable profits in the not-too-distant future. And while I still think Canadian investors should pick up the Canadian market bargains while they’re sitting around, the Magnificent Seven names more or less seem like must-owns at this point in time.
At the end of the day, AI technologies stand out as revolutionary. And for Canadian investors seeking to do better than the TSX Index over the next decade, I’d say it’s going to be tougher if you don’t have the right exposure to the top U.S. mega-cap titans.
In this piece, we’ll look at two names from the group that I view as essential. And while today’s valuations may not entail immense value, I view both stocks as worthy of a radar. Perhaps the new year will bring a correction that serves as a great buying opportunity for those Canadian investors looking to top up.
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Apple
Apple (NASDAQ:AAPL) stock just hit a new all-time high of just over $243 per share. At just shy of 40 times trailing price to earnings (P/E), shares of the iPhone maker are close to the priciest they’ve been in a very long time. Despite the seemingly hefty valuation, I view some timely catalysts on the horizon that may just help AAPL run higher into 2026.
Undoubtedly, Apple Intelligence is a technology that may finally give users who are hanging onto older models (many of whom are likely waiting for a major hardware redesign) a reason to head over to the local Apple Store to pick up the latest model.
Apple’s next-generation silicon will be designed with Apple Intelligence in mind. As ChatGPT integration rolls out shortly while the firm continues adding its own AI innovations, perhaps the hefty premium on the stock is warranted, given the potential for iPhone sales to kick things up a notch.
Meta Platforms
Meta Platforms (NASDAQ:META) is another Magnificent Seven AI beneficiary that strikes me as an essential component of any portfolio aiming to top the TSX Index over the long run. Unlike AAPL, shares actually look cheap at just 28.7 times trailing P/E.
Moving ahead, Meta is pulling no punches when it comes to AI. It wants to land the knockout punch, and I think it’s well-positioned to do this under the great Mark Zuckerberg. He’s the last of the Magnificent Seven founders to remain as chief executive officer. And I’d argue his stewardship is more than worth paying up for.
As the company spends billions on data centers and AI projects (think the Llama model), Meta could emerge as a relative value gem compared to its far-pricier AI software peers.
