Here Are the 3 Cheapest Magnificent Seven Stocks According to a Popular Metric. Are They Buys?

The Magnificent Seven is a group of tech (or tech-adjacent) companies that are among the largest on the market. The list includes Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), Amazon (NASDAQ: AMZN), Apple (NASDAQ: AAPL), Meta Platforms (NASDAQ: META), Microsoft (NASDAQ: MSFT), Nvidia (NASDAQ: NVDA), and Tesla (NASDAQ: TSLA). They are called "magnificent" partly because of their performance over the past decade or so: Every single one has outpaced broader equities. Some would argue that most of them still have plenty of upside left, but after the sustained runs we have seen from these leaders, others might worry that their future success is already baked into their share prices, leaving little room for market-beating returns.

For those with valuation concerns, it might be helpful to look at which ones among the Magnificent Seven are the most reasonably valued using common valuation metrics, such as the forward price-to-earnings (P/E) ratio, and go from there. Let's look into the three cheapest Magnificent Seven stocks based on this metric and decide whether it's worth investing in them.

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1. Nvidia

It might be surprising to find Nvidia on this list. After all, it is the runaway, undisputed leader in the GPU (Graphics Processing Unit) market, the workhorse of artificial intelligence (AI) training. Few corporations have benefited from the AI boom as much as Nvidia over the past three years. Yet, the company's forward P/E of 23.8 makes it the second-cheapest Magnificent Seven stock right now.

GOOGL PE Ratio (Forward) data by YCharts

Should investors buy the stock? On the one hand, some will point to increased competition for Nvidia, including from Cerebras Systems, a recent IPO looking to challenge its dominance in the GPU market. Further, with the AI industry shifting from training to inference, there might be soaring demand for CPUs (Central Processing Units), a niche long dominated by other tech leaders, and one in which Nvidia will struggle to make a significant dent, at least that's what the detractors think.

Also, even Nvidia's recent outstanding financial results -- for the first quarter of its fiscal year 2027, ending on April 26 -- weren't able to jolt the stock. The company's revenue of $81.6 billion, which soared 85% year over year and beat internal projections and analyst estimates, evidently was not impressive enough. Even with all that, I still view Nvidia as a strong buy.

The AI tailwind is far from over, and Nvidia's high-performing GPUs and CUDA ecosystem make it incredibly hard to knock it off its pedestal. Meanwhile, it is making strides in the CPU market. It expects $20 billion in revenue for its stand-alone CPU business through the end of the year, and projects a $200 billion CPU addressable market thanks to the shift to agentic AI. Nvidia remains one of the best stocks to capitalize on the massive AI tailwind and is a buy at current levels.

2. Microsoft

Some investors think Microsoft will lose some business because AI will replace its services. Meanwhile, the company is expecting to spend small fortunes, to the tune of $190 billion during the calendar year 2026, on capex, largely to support its cloud computing and AI businesses.

The market remains unconvinced, though, and that's why Microsoft's shares have declined meaningfully over the past six months. Its current forward P/E of 24.5 makes it the third cheapest among the Magnificent Seven. At these levels, Microsoft also looks like a strong buy.

The company is evolving with the times and integrating AI across its services in ways that could make them more valuable -- not less -- to its customers. Also, Microsoft remains one of the leaders in cloud computing, and the company's expanding cloud backlog suggests sustained, and perhaps even accelerating, demand for its services. Lastly, the company benefits from a wide moat thanks to its brand name, switching costs, and the deep enterprise partnerships it has built over decades of offering its services.

3. Meta Platforms

It's not surprising to see Meta Platforms as the cheapest of the Magnificent Seven stocks, with a forward P/E of about 19.3. The tech leader's latest earnings update featured a sequential decline in daily active users and increased capex spending, which many fear won't pay off and will only squeeze margins and profits.

These are reasonable concerns, especially since the last time the market worried that Meta's heavy investments wouldn't pay off, it was right. The company's work on the metaverse didn't amount to much. However, Meta quickly cut expenses (before its more recent runaway capex spending) and shifted its focus to AI. That highlights an important fact: the company's vast ecosystem of over 3.56 billion users offers it umpteen monetization opportunities.

Meta's ecosystem is a significant advantage. AI has improved the company's advertising business through algorithms that have boosted engagement, while it has also launched AI-powered tools to enhance the ad launch process. Meta Platforms will continue relying on AI to grow its business and may ramp up opportunities beyond advertising over the medium term, such as paid and business messaging on WhatsApp. The stock is still a great pick for investors.

Read the fine print

While the forward P/E ratio is helpful, it is only one of the many ways to determine whether a stock is overvalued. Investors should keep that in mind. Even with this caveat, though, Nvidia, Microsoft, and Meta Platforms have strong long-term prospects, given their innovative capabilities and competitive advantages.

Prosper Junior Bakiny has positions in Alphabet, Amazon, Meta Platforms, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool has a disclosure policy.