The "Magnificent Seven" Ranked From Best to Worst Quarterly Performance -- and Which Ones Are the Best Buys Right Now

The "Magnificent Seven" stocks have led the S&P 500's gains throughout this bull market, helping the index climb 78% over the past three calendar years. This has been amid excitement about artificial intelligence (AI), a technology seen as game-changing for its ability to revamp how business is done and how daily life is organized. Each of these tech giants is involved in AI to some degree and clearly could benefit as the AI story unfolds.

Amid various headwinds, from geopolitical to general worries about AI spending, these players didn't soar in the first quarter of the year -- but the second quarter was a better period for most, even if they didn't replicate the extraordinary performance delivered in recent years.

Now, as the second half of the year begins, it's the perfect time to examine the performance of the "Magnificent Seven" stocks in the recent quarter -- and consider which ones are the best buys. Let's get started.

Image source: Getty Images.

A track record of growth

So, first, a quick note about these companies. Investors started calling them the "Magnificent Seven" a few years ago in reference to the 1960 Western. Like the main characters in the film, they're tough and can get the job -- in this case, technology -- done. Each of these companies has built a track record of earnings growth, is a leader in its specialty area, and has solid long-term prospects.

Now, let's rank these companies by second-quarter performance, from best to worst.

• Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), up 23%
• Nvidia (NASDAQ: NVDA), up 14.7%
• Amazon (NASDAQ: AMZN), up 14.4%
• Apple (NASDAQ: AAPL), up 14%
• Tesla (NASDAQ: TSLA), up 13%
• Microsoft (NASDAQ: MSFT), up 0.7%
• Meta Platforms (NASDAQ: META), down 1.5%

The first to benefit from AI

Alphabet, Nvidia, and Amazon may have climbed the most as they've been among the first to benefit from the AI boom. Alphabet and Amazon have seen revenue soar thanks to their cloud services for AI customers, and Nvidia, as the AI chip leader, has been an enormous winner since the earliest days of the AI story. For example, Nvidia reported record revenue of more than $215 billion in the latest fiscal year, and Amazon Web Services (AWS) -- Amazon's cloud unit -- recently reached an annual revenue run rate of $150 billion. So it's not surprising to see their stock prices climb as investors return to AI stocks.

Microsoft's performance has suffered as some investors worried that progress in AI would lead to the technology replacing software. But Microsoft stock has gradually returned to positive territory amid optimism that the company's deep presence within its customers' operations would help it maintain its market position.

As for Meta, the company is working on AI to make its apps better, deliver personalized AI to users, and improve the advertising experience and results for its ad customers. All of this could generate significant growth down the road -- but it takes time to monetize, and that has weighed on investors' appetite for the stock.

Which stocks are great buys?

Now, let's consider which of these stocks today make the best buys. As mentioned above, each of these players offers a track record of profitability and excellent long-term prospects, elements that support the investment case. It's important to note that certain Magnificent Seven companies may be "safer" bets, while others may be a bit higher risk. So it's important to consider your investment style before choosing a stock.

Next, let's take a look at valuation.

AMZN PE Ratio (Forward) data by YCharts

As you can see in the chart above, Tesla is the priciest in relation to forward earnings estimates, while Meta is the cheapest. But in my opinion, neither is the very best buy right now.

Instead, I would opt for Alphabet and Nvidia. These two AI giants have seen their stock prices advance, showing momentum, yet they remain very reasonably priced -- in the case of Nvidia, I would go so far as to say the stock is dirt cheap considering the company's strength in AI and expertise in serving various industries, from telecom to robotics. Meanwhile, these players are monetizing AI, so they already are benefiting from their investments.

All of that makes Alphabet and Nvidia the best "Magnificent Seven" players to scoop up as the second half gets started.

Adria Cimino has positions in Amazon 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.