3 "Magnificent Seven" Stocks Worth Buying Right Now

After leading the market so decisively for so long, things are finally changing for the so-called "Magnificent Seven" stocks.

Year to date, they're collectively up a mere 2%, versus the S&P 500's gain of more than 11%. This sudden weakness could linger for a while. too, given that most of the Mag-7 names are so integral to the artificial intelligence revolution that's starting to lose its luster.

Still, three of the Magnificent Seven stocks are arguably undervalued at this time. They're ripe for a long-term recovery, regardless of how the group or the broad market performs for the foreseeable future. Here's a closer look at each one of these names.

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1. Microsoft

It's no secret why Microsoft (NASDAQ: MSFT) shares are down 25% from August's peak. The software giant's cloud computing business's growth is slowing. Its capital spending -- mostly on AI infrastructure -- is growing to a hefty $190 billion,even though its artificial intelligence business's current annualized revenue run rate is only $37 billion. The market's doing the math, so to speak, and the numbers aren't adding up.

Then there's its video-gaming arm. While its Xbox console and games were never a major profit center, this was a reliable cash cow. Now it isn't. Last quarter's Xbox revenue fell 5% year over year.

There are two important details to consider here, however.

The first is the fact that CEO Satya Nadella finally seems to be recognizing reality, and is responding. The company recently laid off roughly 4,800 workers in an effort to adjust its staffing with respect to its opportunity. It's also restructuring its video gaming unit in a way that will make this weakening industry less of a liability to its income statement.

This won't change much immediately. It's only about 2% of its entire workforce. It does indicate, however, that Microsoft's management knows more sweeping action is merited.

The other thing to consider is the distinct possibility that with shares now down 25% from their peak, all of these problems are already reflected in the stock's price, and then some.

That's what the analyst community is saying, anyway. The vast majority of analysts covering this ticker currently rate it as a strong buy, with a consensus price target of $557.74. That's more than 40% above the stock's present price.

2. Amazon

It might not be too tough to figure out what's undermining Microsoft shares of late. E-commerce giant Amazon (NASDAQ: AMZN), however, is a different story. Its first-quarter top line improved 17% year over year, led by 28% growth from its cloud computing arm Amazon Web Services -- an industry Amazon continues to lead. Operating income is growing as well. The company's even designing its own artificial intelligence processors to better (and more cost-effectively) serve its cloud customers that specifically need more cloud-based AI computing horsepower.

Nevertheless, Amazon shares have trailed the overall market for the past year. They haven't made any net progress since early November, largely thanks to last month's weakness, when several other Magnificent Seven stocks suddenly began struggling.

What gives?

Although it's not quite as pronounced as it is with Microsoft, investors are concerned about Amazon's heavy spending on artificial intelligence infrastructure. The company is budgeting roughly $200 billion for capital expenditures this year alone, up nearly 60% from last year's capital spending. As is the case with many of its peers, investors aren't entirely sure these big AI-related outlays will result in enough of a return to fully justify them.

Amazon is also taking on a bunch of new debt to at least partially fund these projects. It issued $37 billion in bonds in March of this year, and then sold an additional $25 billion worth earlier this month. Unlike the issuance of new stocks, these loans are legal obligations, and must be repaid regardless of how the assets they'll fund perform in terms of profit production. If Amazon's artificial intelligence ambitions don't pan out as hoped, it's still on the hook for this borrowed money.

The thing is, even if it doesn't manifest right away, the opportunity for this AI infrastructure is very real. Amazon remains one of the industry's preferred service providers. Warner Bros. Discovery and Fox Corporation both recently announced business relationships with AWS, following last month's news of an AWS partnership with Southwest Airlines.

3. Alphabet

Despite it being a solid performer since early 2023, Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) shares are down 12% since early May.

Don't sweat it too much. It's not an indictment of the company's past or potential performance. It's mostly just volatility, stemming from headlines about other tech companies. It may also be as much discount as you're going to see for the stock for a while, in fact. So, act now while the window of opportunity is still open.

Every one of this company's businesses is still firing on all cylinders. Google Services' total revenue grew 16% year over year in Q1, accelerating the fourth quarter's growth pace of 14%. Meanwhile, its cloud computing arm (which serves a growing number of artificial intelligence customers) saw its top line grow 63% year over year during Q1 2026, more than doubling its operating income in the process. Look for comparable growth going forward too, regardless of how well or how poorly the economy holds up from here.

Alphabet leads several markets that are largely immune to economic headwinds.

Search is one of them. A weak economy might result in weaker consumerism, but it doesn't result in fewer web searches. Google could become even more lucrative in sluggish economic environments, in fact, since connecting with consumers at their primary gateway to the internet is the best place to cost-effectively turn people into customers.

Mobile platforms are another important business for Alphabet. Numbers from Statcounter indicate that 69% of the world's mobile devices also still run Alphabet's mobile operating system Android, again positioning the company as a key, revenue-bearing gatekeeper to the way most of the world now connects to the internet.

Google Docs even enjoys more productivity software market share than the venerable Microsoft.

The point is, Alphabet's hold on the internet is pretty tight on several fronts, ranging from free email to video to search to platforms to cloud computing to -- increasingly -- artificial intelligence. This positions it as a top-of-mind provider on other fronts, few of which will be affected much by an economic slowdown.

The market will remember this resiliency sooner or later, and likely sooner than later. The company's second-quarter earnings report, coming later this month, could be that catalyst.

James Brumley has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Warner Bros. Discovery. The Motley Fool recommends Southwest Airlines. The Motley Fool has a disclosure policy.