Got $10,000? This “Magnificent Seven” Stock Is an Unbelievable Bargain.

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Got $10,000? This “Magnificent Seven” Stock Is an Unbelievable Bargain.

Alphabet is by far the cheapest stock in the “Magnificent Seven.”

Alphabet faces three headwinds right now.

Despite all the headwinds it faces, Alphabet’s growth is in the top half of the cohort.

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The “Magnificent Seven” cohort was thus named by Bank of America analyst Michael Hartnett, describing some of the market’s largest stocks today. This group has led the market forward over the past few years and has delivered fantastic returns to investors. It’s made up of:

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Nvidia

Apple 

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Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL)

Meta Platforms 

Tesla 

Despite its size, this group is known for its strength and growth and normally receives a premium valuation as a result. However, there’s one that escapes this trend: Alphabet. Alphabet’s stock has reached very low levels, and I think it looks like an excellent bargain if you’ve got the stomach for some of the challenges it brings.

Image source: Getty Images.

Alphabet is the parent company of multiple brands, but some of the most notable are

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,

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, the Android operating system, and Waymo. Although Alphabet’s business is fairly broad, most of its revenue comes from advertising via

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and its dominant

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search engine. Advertising accounted for about 75% of Alphabet’s total revenue in Q1, so it’s clearly important to the business. Furthermore, advertising is its most mature area, generating the bulk of Alphabet’s profits and allowing it to reinvest in other high-growth areas like

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Cloud and Waymo.

This is the first problem investors see with Alphabet’s stock, as advertising is cyclical. Ad budgets tend to get cut as companies prepare for economic downturns, and there’s a prevalent fear that President Donald Trump’s tariff plan could plunge us into a recession, or at the very least, a downturn. Only time will tell if this forecast is accurate, but Alphabet’s

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Search and

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ads each delivered 10% year-over-year growth in Q1, so this weakness hasn’t shown up yet. We’ll have to keep an eye out during Q2 results to see if these growth rates decline, but as of right now, Alphabet’s financials do not support this thesis.

Another fear is that

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Search, Alphabet’s cash cow, could be replaced by

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technologies. While this is a possibility,

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already integrated AI search overviews and has launched several competitive generative AI offerings. Management was very bullish on AI Overviews and stated that it’s an incredibly popular feature with more than 1.5 billion monthly users.

While Alphabet may lose some market share over the long term, it’s still growing revenue at a double-digit pace, so there’s not much to be concerned about. Furthermore, generative AI has been around for nearly three years and has been incredibly useful for at least the last year and a half.

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Search is still performing well despite that headwind, so I’m not as concerned about this headwind as the market is.

Perhaps the biggest elephant in the room is the question, “What will Alphabet look like in five years?” I’m not talking about how various generative AI technologies could affect Alphabet’s dominance; I’m talking about Alphabet being found guilty of operating an ******** monopoly in its advertising platform and search engine. Various ideas have been floated around about how to remedy these issues, but Alphabet will fight to ensure its company stays intact.

We’re years away from learning the outcome of these lawsuits, and each will likely end up in front of the Supreme Court. Until an end is reached, I’m still looking at Alphabet as a whole; anything else is just speculation.

I believe Alphabet’s stock looks like a bargain because it’s cheaper than the broader market, yet it is growing its earnings much faster. With the broader market trading for 22.4 times forward earnings (as measured by the S&P 500), Alphabet’s 17.6 times forward earnings looks like a bargain.

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data by

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Alphabet is also the cheapest “Magnificent Seven” stock by a wide margin, with the next cheapest stock (Meta Platforms) trading for 26.3 times forward earnings.

Despite its cheap stock price, Alphabet posted the second-best net income growth in Q1, rising 46% compared to Nvidia’s 64% growth. On the revenue side, it’s exactly in the middle, beating

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, Apple, and Tesla.

If all you did was look at Alphabet’s finances compared to its peers, you would conclude that it would be worth much more than it is today. However, because of the various narratives surrounding Alphabet’s stock, it trades at a deep discount to its peers and the market. Although some investors may not be comfortable investing in Alphabet’s stock due to the impending government action (which is a fair reason to avoid the stock), I think the other reasons for Alphabet’s stock trading at a discount aren’t as valid.

If Alphabet can fend off generative AI and the government over the next few years, it could easily be one of the top-performing “Magnificent Seven” stocks to own. However, it has an increased risk compared to its peers,

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Before you buy stock in Alphabet, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 

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for investors to buy now… and Alphabet wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when 

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 made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $668,538!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $869,841!*

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*Stock Advisor returns as of June 2, 2025

Bank of America is an advertising partner of Motley Fool Money. John Mackey, former CEO of Whole Foods Market, an

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subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for

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and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors.

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has positions in Alphabet,

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, Meta Platforms, Nvidia, and Tesla. The Motley Fool has positions in and recommends Alphabet,

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, Apple, Bank of America, Meta Platforms,

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, Nvidia, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on

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and short January 2026 $405 calls on

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. The Motley Fool has a

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.

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was originally published by The Motley Fool

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#Magnificent #Stock #Unbelievable #Bargain

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