Not Nvidia. Not Microsoft. This "Magnificent Seven" Stock Is the Cheapest Right Now.

As the old adage goes, you get what you pay for. In other words, if you want quality, you can expect to pay a premium for it. The idea applies within the world of investing as well.

Still, knowing that stocks' prices and valuations constantly ebb and flow -- sometimes to extremes -- it's not wrong to think about the price you're paying to plug into a particular company's performance.

This premise presents a potential opportunity to investors interested in the market's biggest and highest-profile names. Although they're all so-called "Magnificent Seven" stocks, one of these names is measurably cheaper than all the others right now. While not a reason in and of itself to step in, this valuation bolsters the existing bullish case.

This Mag-7 bargain? Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), priced at just over 16 times this year's analyst-projected per-share earnings of $20.59.

The numbers

If you've been keeping tabs on Google's parent company and its recent quarter, you already know something important. Its earnings projection includes a $6.26-per-share second-quarter accounting benefit linked to the growth of the company's investments in SpaceX and Anthropic. Without that one-time bump, Alphabet's only on track to earn $14.33 per share this year, translating into a price-to-earnings ratio of a little more than 23.

That's not exactly cheap, but it's not outrageous either. It's less than Nvidia's 2026 comparison of 24, as well as Microsoft's P/E ratio of 27 based on this year's expected earnings of $19.76 per share. Indeed, the only Magnificent Seven name that's even sort of close is Amazon. However, like Alphabet, it too reported a big gain from its stake in Anthropic during Q2 of this year. Indeed, $53.4 billion of its Q2 $62.6 billion in net income came from its Anthropic holding. Strip that out, and Amazon stock is valued at roughly 27 times 2026's anticipated profit.

There's more than one way to value a stock, of course. Arguably the more meaningful way is based on that company's future earnings. That's where things start changing a bit here.

Data source: Finviz. Forward price/earnings ratios reflect 2027's per-share earnings projections. *Reflects significant one-time accounting benefits.

Although GOOGL shares are only slightly more expensive on a forward-looking basis than Facebook parent Meta's stock price of around 21, Nvidia is technically trouncing both by this measure at only 14 times its expected 2027 earnings of $15.80 per share. It's an outlook that requires a near-doubling of this year's likely profits, on year-over-year revenue growth of nearly 70%. Nvidia might be able to do it, but there's no room for error. Even the slightest balk in overall capital spending on AI hardware could pull the rug out from underneath this name.

In other words, don't be too trusting of what superficially looks like a bargain price. Most investors aren't, in fact. That's why NVDA shares are valued so cheaply compared to next year's predicted profits.

In the right business(es) in the right way at the right time

Those are the comparative numbers, and they matter. Just don't become so valuation-focused that you lose sight of the fact that numbers aren't everything. As an investor, you're also buying into parts of a business that you can't quantify.

That's the crux of the reason to consider stepping into a stake in Alphabet over any other Mag-7 name right now, regardless of any of their valuations. It's arguably better positioned than any of these other companies to stand up to whatever headwinds might soon start blowing.

Its revenue mix has a great deal to do with this resiliency. While Google Cloud's Q2 revenue soared 82% to triple this arm's operating income, the company's breadwinning business remains search-based advertising, which is a reliable cash cow regardless of the economy's condition. For perspective, Google and its related profit centers still contribute more than four times what cloud computing does to Alphabet's bottom line.

Image source: Getty Images.

To the extent that AI is a key driver of future growth, Alphabet's got a competitive edge. That's the fact that it's in a better position to sell artificial intelligence as a recurring service than most of its top rivals are.

Most of the major names in the business offer such options one way or another. However, with processors, data centers, and software -- the full "stack" -- plus existing relationships with business customers, Google is more likely to remain a provider even if competitors lose customers in a slowdown of the AI industry's current growth.

Google Cloud's total backlog of future revenue that's been contracted but not yet consumed or booked now stands at $514 billion. That's 20 times last quarter's top line for this arm alone, none of which will necessarily require the outright sale of computing hardware.

A compelling buy at this valuation, no matter what it is

Perhaps the big takeaway here is simply understanding that while Alphabet is often categorized as a technology company, that's not quite what it is. It's a service company. It's always served consumers, and now it serves a sizable slice of the technology industry too. That may also be why -- like most recurring-service stocks -- its ticker is usually priced and valued more like a service name, and that's OK.

There's never a bad time to own this consistent performer, but it's particularly attractive when you can get in at something of a discount, like you can right now.

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