The “Magnificent Seven” includes some of the largest tech-oriented companies, but not all of them can be considered true AI plays. A new Magnificent Seven solely for AI stocks could include Nvidia, Microsoft, and Meta Platforms, as well as Advanced Micro Devices, Taiwan Semiconductor Manufacturing, Adobe, and Deere. These seven companies are all excellent ways to invest in AI across various industries.
Nvidia is the poster child of the AI craze, with its growth driven largely by sales to data centers. The company provides faster and more secure processing power necessary to support complex AI solutions. The main risk for Nvidia is a slowdown in demand from its data center business, but this is unlikely as long as AI investments pay off for its customers.
Meta Platforms plans to spend $10 billion on Nvidia GPUs, and is leveraging AI to boost user engagement, improve its algorithm, and align ads to interested users. Instagram, owned by Meta, has become one of the most valuable digital platforms in the world, thanks to its AI investments.
Microsoft is another company that deserves a spot in the AI Magnificent Seven, as it utilizes AI to improve performance and accelerate growth in its solutions. The company’s various AI initiatives, such as Copilots and Azure AI, are driving its success across business-to-business and business-to-consumer platforms.
Advanced Micro Devices (AMD) is often grouped with Nvidia but takes a different approach. Although its growth is not as fast as Nvidia’s, it is expected to unlock explosive growth by competing in the GPU market for AI applications and CPUs for AI-enabled PCs. AMD will need to deliver to justify its valuation, but it remains an innovative and exciting AI play for risk-tolerant investors.
Taiwan Semiconductor Manufacturing (TSMC) is a safe investment in the AI-fueled semiconductor space, manufacturing chips for companies like Nvidia, AMD, Broadcom, and Intel. TSMC is compensated well for its work due to its complex and precise workflows and high operating margins. As long as chip demand increases, TSMC will continue to thrive.
Adobe has seen a resurgence in growth due to its AI investments, particularly with the release of Firefly, a generative AI tool for Creative Cloud. The company is focusing on customer acquisition and engagement through AI tools, despite the strain on profits. Investors may want to consider buying Adobe with a long-term mindset, understanding that this investment in AI could pay off in the future.
Lastly, Deere may seem like an outlier in the tech sector, but its Smart Industrial strategy is leveraging AI to automate farming processes and boost crop yield. Investing in AI across various industries is a way to stay ahead of disruptive trends, and companies like Deere are at the forefront of utilizing AI to drive growth. It is important to invest in AI in a way that aligns with your understanding and long-term goals.
