If I Could Buy Only 1 "Magnificent 7" Stock Over the Next Year, Alphabet Would Be It, but Here's the Key Reason

The "Magnificent Seven" moniker was originally intended as a warning to long-term investors. Remember, the movie by the same name doesn't have the happiest of endings, and the tragedy made sense as a metaphor for potential market bubbles. Still, the Magnificent Seven group keeps setting the tone for the overall stock market, and most of these stocks are market darlings in 2025, with double-digit price gains over the last 52 weeks.

But Google parent Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is lagging behind with a 2% price dip over the last year, and the stock looks downright undervalued in many ways. It's the only Magnificent Seven stock I have bought this year, for one simple reason: It's the best combination of affordable shares and unbeatable artificial intelligence (AI) expertise in this elite group.

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Alphabet is trailing behind Nvidia, Amazon, and Microsoft (but that's not the whole story)

The other Magnificent Seven companies may have a leg up on Alphabet in the AI market so far. Nvidia's (NASDAQ: NVDA) profitable sales growth is unbeatable. Revenue-based market shares suggest that the cloud computing solutions from Amazon (NASDAQ: AMZN) and Microsoft (NASDAQ: MSFT) are running circles around Google Cloud.

But those proven and promised results are firmly baked into the stock prices. Nvidia stock trades at 47 times earnings and 49 times free cash flows today. Microsoft and Amazon have P/E ratios in the mid-30s and cash flow multiples well above Nvidia's. At the same time, Alphabet stock looks affordable at 19 times earnings and 28 times free cash flows.

Image source: Getty Images.

Don't overpay for tomorrow's AI leaders

The numbers never tell the whole story, and there's more to say about Alphabet's long-term growth opportunities. From AI services to quantum computing systems, the company was built to thrive amid ever-changing markets and unexpected economy jolts. But the modest stock valuation is a great starting point for further research.

Should you invest $1,000 in Alphabet right now?

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Anders Bylund has positions in Alphabet, Amazon, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Nvidia. 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.