3 "Magnificent Seven" Stocks to Buy and Hold Right Now

The "Magnificent Seven" stocks are core positions in many portfolios. You don't become megacap monsters without the huge earnings power and investor interest that Magnificent Seven stocks bring.

In the latest Hazeltree Crowding Report, which tracks which stocks institutional investors are holding, six of the seven Mag 7s -- excluding Tesla -- were among the top 10 most popular long positions in May.

But of those six, three appear to be the most attractive right now -- Nvidia (NASDAQ: NVDA), Microsoft (NASDAQ: MSFT), and Meta (NASDAQ: META).

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1. Nvidia

All three of these stocks have one thing in common -- they are trading at a significant discount.

Nvidia stock is trading at just 23 times forward earnings, down from 40 this time a year ago. Its long-term valuation is even more attractive as it has a five-year price/earnings-to-growth (PEG) ratio of just 0.63. A PEG ratio below 1 means that the stock is undervalued relative to its long-term earnings expectations -- and the lower the PEG ratio, the cheaper it is.

This alone signals that Nvidia is in the buy zone, given its huge earnings power. In the latest quarter, revenue jumped 20% sequentially and 85% year over year while earnings surged 214% year over year. For the current quarter, Nvidia anticipates revenue of $91 billion, an 11% increase over last quarter, and a gross margin of 74.9%, down slightly from 75% last quarter.

Looking out, this fiscal year analysts anticipate 88% earnings growth for Nvidia to $8.96 per share. For the next fiscal year, its fiscal 2028, Wall Street expects 42% earnings growth for Nvidia.

Analysts have a median price target of $300 per share for Nvidia, which suggests a 44% return over the next 12 months.

2. Microsoft

Microsoft stock has not had a great year, down 21% year to date. Microsoft's share price decline is due to various factors, including its formerly high valuation, concerns about overspending on artificial intelligence (AI), worries related to its partner OpenAI's profitability, slightly slowing AI cloud growth, and other issues.

But most of these are short-term concerns. In the latest quarter, Microsoft's results alleviated some of those issues as it had blowout earnings that topped estimates. More importantly, its cloud revenue surged 29% year over year while its Azure AI cloud sales rose 40%. Also, it restructured its deal with OpenAI so it is no longer an exclusive provider and no longer pays revenue share to OpenAI.

In addition, Microsoft anticipates double-digit revenue growth this fiscal year, including 5% sequential sales growth in the current quarter. Furthermore, Azure sales are anticipated to rise 40% year over year in the current quarter and accelerate in the second half of calendar year 2026.

The kicker is Microsoft's dirt cheap valuation. It is trading at around 19 times forward earnings, which is near the lowest it has been in the last 10 years.

This makes Microsoft stock a no-brainer buy right now.

3. Meta Platforms

Meta has had its share of issues as of late, with shares sinking due to a recent report in the Financial Times that it was raising money for AI spending -- which Meta officials called "pure speculation."

Meta stock also tanked some 5% recently when it was learned that one of its top executives in charge of AI implementation was leaving the company.

Overall, Meta stock is down 13% year to date, but like Nvidia and Microsoft, it is extremely cheap. Meta stock is trading at just 18 times forward earnings and has a PEG ratio of 0.82.

This is an incredibly cheap valuation for one of the largest, most successful companies in the world. In the latest earnings report, it grew revenue 33% and earnings 62%. Furthermore, it expects 7% sequential revenue growth in the current quarter.

Expenses are worth watching, as Meta guides for a 41% increase in spending to about $165.5 billion at the midpoint of its range for this fiscal year. It also raised its capital expenditures range to $125 billion to $145 billion, up from $115 billion to $135 billion, to fund its AI data centers.

But Meta's low valuation just makes it too cheap to pass up. Analysts have a median price target of $808 per share, which suggests 43% upside (at the time of this writing). Like the others, its a screaming buy.

Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool has a disclosure policy.