Ranking the Best "Magnificent Seven" Stocks to Buy for 2026. Here's My No. 6 Pick.

Each stock in the "Magnificent Seven" -- Nvidia, Apple (NASDAQ: AAPL), Alphabet, Microsoft, Amazon, Meta Platforms, and Tesla -- has outperformed the S&P 500 (SNPINDEX: ^GSPC) over the last three years. But that doesn't mean the trend will continue over the next three years.

Welcome to the second article in a series where I rank each Magnificent Seven stock. In my last article, I discussed why Tesla is my least favorite pick. In this segment, we'll discuss why Apple is another Magnificent Seven stock that isn't worth buying in 2026.

Image source: Getty Images.

Apple is showing signs of improvement

Just five months ago, Apple was down over 20% year to date. Investors were scrutinizing Apple's inability to capitalize on artificial intelligence (AI) -- reacting negatively to product and service announcements at its June Worldwide Developers Conference. The stock appeared to be a great buy because its valuation was reasonable, so the company only had to deliver decent results to impress investors. And it did.

Apple's revenue and earnings growth have been improving, and its operating margin is at its highest level in a decade -- at 32%. But Apple is still growing at a snail's pace compared to its Magnificent Seven peers.

For the 12 months ended Sept. 27, 2025, Apple's product sales only increased by 4.1%. Services, including Apple TV, Apple Music, Apple Pay, and Apple Card, grew by 13.5%.

A bright spot for Apple is that services, which are higher-margin than products, continue to make up a larger percentage of total sales, which is the key reason why its margins have been steadily ticking higher. In fiscal 2025, services made up 26.2% of total sales. For context, the combined sales of Mac, iPad, wearables, home, and accessories were 23.4% of sales. So services are now the second-largest revenue driver behind iPhone.

Overall results weren't that impressive, but like usual, Apple was able to accelerate its earnings growth through stock buybacks. Apple spent a mind-numbing $90.7 billion on stock repurchases in fiscal 2025.

From reasonably priced to overvalued

Apple is a reliable, high-margin, and moderate-growth company with the potential to monetize AI through daily use functions on its devices. The company's profits could accelerate with the easing of trade tensions, which are eating away at its margins from its second-biggest market -- China.

However, there's one glaring problem with Apple -- its valuation. Remember how I said Apple was down over 20% year to date just five months ago? Well, now, it's up around 9% year to date, which has pushed up its valuation.

Based on its forward price-to-earnings ratio, Apple is now more expensive than Meta Platforms, Alphabet, Microsoft, and Amazon -- even though all of those companies are growing faster.

Keep Apple on a watch list for 2026

Apple is a textbook example of a great company with an overextended valuation. It's hard to know for sure, but I would guess that its volatility is a key reason why Warren Buffett-led Berkshire Hathaway has drastically reduced its stake in Apple in recent years.

If you're going to pay a high earnings multiple for a stock, it's important for the company to be able to grow fast enough to bridge the gap between expectations and actual results. Apple simply doesn't have as clear a runway for accelerating earnings growth as other Magnificent Seven components, so it's not worth buying at this time.

Stay tuned for my rankings on the remaining five Magnificent Seven stocks.

Daniel Foelber has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.