Better Buy: SpaceX or the "Magnificent Seven"?

For years, the members of the "Magnificent Seven" were among the 10 largest companies in the world by market cap. This group is made up of:

1. Nvidia
2. Alphabet
3. Apple
4. Microsoft
5. Amazon
6. Tesla
7. Meta Platforms

Now, that's no longer the case. The surging valuations of a few chipmakers that have been benefiting from the AI build-out and the IPO of Space Exploration Technologies (NASDAQ: SPCX) have left Tesla and Meta Platforms on the outside looking in, as the world's 11th- and 12th-largest companies, respectively.

In part due to the rise of these other tech players, the premise behind the composition of the Magnificent Seven is being called into question, and some investors are wondering if SpaceX deserves a spot at the table. Could SpaceX be a better buy than any of the Magnificent Seven companies?

Image source: Getty Images.

Most of the Magnificent Seven rake in incredible profits

At the end of the day, companies are valuable because they generate profits. While revenue is an important metric, when a company reaches megacap size, it matters less and less. From a net income perspective, there's only one company that stands out as a sore spot among the Magnificent Seven: Tesla. The rest fall pretty much in line with their valuations and rankings.

NVDA Net Income (TTM) data by YCharts.

What does SpaceX generate in net income? Nothing.

During its IPO roadshow, SpaceX informed investors that its net income margin was negative 26%. However, its target margin is 45%. That's an ambitious goal, but if SpaceX could snap its fingers right now and instantly have a 45% profit margin, its real profits still wouldn't be good enough to rank it adequately on this chart.

In 2025, SpaceX's revenue totaled $18.7 billion. If it had had that hypothetical 45% profit margin, that would have given it $8.4 billion in profits. That's barely better than Tesla did, and a long way away from sixth-place Meta Platforms. SpaceX will have a lot of work to do to grow its bottom line to the point where it can reasonably be viewed as a peer to the Magnificent Seven cohort, but how long might that take?

SpaceX has a ton of hoped-for growth priced into its stock

During 2025, SpaceX's revenue grew at a 33% pace, but management noted its growth targets are "significantly higher." While I'm not a huge fan of such vague statements, let's postulate for the sake of argument that SpaceX can grow at a sustained 40% rate for the foreseeable future. Additionally, let's say it can achieve its 45% net income target in the next few years.

SpaceX last week achieved a valuation close to that of Amazon, a tech giant that produces $90 billion in net income annually. Let's set that as our target, and attempt to calculate how many years it could take for SpaceX to get there. To book $90 billion in profits at a 45% profit margin requires $200 billion in revenue. With a steady 40% revenue growth rate from 2025's $18.7 billion revenue base, that would require seven years of growth.

That's a ton of speculative future growth already baked into SpaceX's stock price, and it leaves me concerned that the stock is significantly overvalued. Its high market cap is based on the future it could provide many years from now, not on the reality of the company it is now. That echoes the investing sentiment surrounding Tesla today. If the long-term thesis pans out, it could be a good investment, as Tesla has already shown that it can trade on a hyped-up valuation for a long time. But I think putting money into the other Magnificent Seven companies would be a better investment strategy today, as those companies have a lot less hype baked into their stock prices.

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