The Magnificent Seven sailed into 2026 in a rather muted spot. While there has been a notable divergence in performance among the members, I do think that the group remains worth sticking with for the long haul, especially the names that have been viciously marked down.
Whether we’re talking about heavy AI capex that’s made investors uncomfortable or strong growth that’s failed to meet high expectations, I do think there’s an opportunity for stock pickers to nab great value in the group. Of course, the collective group looks like a stellar buy, given their powerful AI strategies and seemingly untouchable cash drivers, which are pretty much surrounded by some of the widest moats in tech.
That said, I do think that the results have been incredibly strong and that investors might be a bit shortsighted, maybe even impatient, as they demand strength (even a blowout) sooner rather than later. Of course, it’s a chore for most investors to wait for results these days.
As such, many investors may be at risk of exiting perfectly good growth companies with sound AI narratives, just because the front-loaded AI investments are likely to take longer to live up to expectations. And expectations have grown quite high amid the AI bubble jitters. For now, it’s on Mag Seven and others to prove there is no AI bubble by showing signs of money to be made (not just spent) in AI.
About half of the Mag Seven have shown their hands for the last quarter. And, for the most part, it’s been a mixed bag, as far as reactions are concerned. This piece will have a closer look at two of the Mag Seven names that I think are cheaper than the rest, especially after the latest round of earnings.
Microsoft
Let’s get to the elephant in the room this week. Microsoft (NASDAQ:MSFT | MSFT Price Prediction) reported its numbers, and they were quite decent. But the market wouldn’t have it, with shares viciously nosediving more than 10% in response.
Of course, Azure growth fell a bit shy of the estimates, but not because AI demand is fading. Rather, the firm grappled with capacity constraints that seem to be holding back growth. Undoubtedly, the big question is how much Azure can reaccelerate once that weight is lifted off Microsoft’s shoulders.
Add the OpenAI exposure into the equation (that’s seen as a bad thing nowadays), and I’m inclined to view Microsoft’s post-quarter plunge (which was one of the worst in some number of years) as nothing more than a road bump en route to what appears to be a long multi-year runway.
As a firm that’s playing the long game (its Maia 200 chip is a big, though pricey initiative), I do think it’ll prove wise to stick with Microsoft shares, especially given the likelihood that growth and margins will eventually get back on track as the AI revolution plays out.
Apple
Apple (NASDAQ:AAPL) didn’t just deliver an incredible round of quarterly earnings results; they delivered a shocker that I thought should have paved the way for a 5-10% single-day gain. There was remarkable strength across the board, as iPhone 17 had a chance to flex its muscles. The iPhone isn’t just selling well; it’s been met with “unprecedented” demand at home and over in China, where Apple saw a “surprising” 38% surge.
With Apple Intelligence catalysts just ahead, I’d argue the latest Q1 results are just a hint of what could be coming as a big upgrade cycle looks to kick off. Add services growth drivers (think the release of Creator Studio and the potential for an AI Pro service much later on), and I find it perplexing as to why Apple did close to nothing after revealing its sensational earnings.
As AI looks to move closer to the edge, I’m inclined to view Apple as one of the bigger bargains of the Mag Seven from a long-term perspective. The post-earnings reaction suggests investors are a bit confused about where the firm stands in AI and whether the latest iPhone sales strength is anything more than a temporary blip. I think the supercycle has kicked off and wouldn’t bet against Apple, even as investors underappreciate its latest quarterly beat.
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