Shares of the “Magnificent Seven” have had a rough time of late, but investors shouldn’t give up on them as markets turn volatile in August.
“Be careful with your choices now, given the more difficult market conditions,” said Bill Blain, founder of Wind Shift Capital.
Blain, the regular author of the Morning Porridge newsletter, today named Meta (META) the best Magnificent Seven play.
“The advertising business is huge,” Blain told Yahoo Finance CEO Brian Sozzi on Yahoo Finance’s Opening Bid podcast (watch the video above or listen here). “About 75% of advertising is done online, and the company that does that best right now is [Meta].”
Meta’s second-quarter earnings figures last week underscore Blain’s optimism.
Earnings and revenues far exceeded analyst estimates, with profits up 73% from a year ago.
The app family (Instagram, Facebook and WhatsApp) also beat expectations with revenues of $38.72 billion. App family sales increased by about $7 billion year over year.
Meta shares have risen 7.5% since the company’s Aug. 1 earnings report, according to data from Yahoo Finance. Shares are still down 4% over the past month as sentiment around the Magnificent Seven name has deteriorated.
The Magnificent Seven includes Apple (AAPL), Tesla (TSLA), Alphabet (GOOG, GOOGL), Amazon (AMZN), Microsoft (MSFT), Nvidia (NVDA) and Meta.
Unlike Meta, the other six names have been hit by several negative reports in recent weeks, putting pressure on their shares.
Nvidia reportedly delayed shipments of its new Blackwell AI chips by a quarter. Tesla had a terrible second quarter. Alphabet preached that AI adoption needed more time, while market leader Microsoft’s AI results fell short of expectations. Amazon warned of a slowing consumer base in the second quarter.
All of the Magnificent Seven stocks that aren’t part of Meta are down since Meta’s earnings report, with Tesla’s 13% drop being the biggest.
And then there’s Apple.
Blain, who had been bullish on Apple, recently changed his perspective.
“When Warren Buffett turned around and sold the stock, I thought, ‘He must know something I don’t know,’” Blain said.
Warren Buffett’s Berkshire Hathaway (BRK-A, BRK-B) has reportedly cut its stake in the tech giant by as much as 50%. It’s unclear what Buffett’s motivation was, but it sent a negative signal to an increasingly nervous market.
Three times a week, Yahoo Finance Executive Editor Brian Sozzi fields insightful conversations and chats with the biggest names in business and markets on Opening bid. Find more episodes on our video hub. Pay attention to your preferred streaming service. Or listen and subscribe to Apple Podcasts, Spotifyor wherever you find your favorite podcasts.
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