Step aside, Tesla! These 6 stocks could replace them in the “Magnificent 7”

By | March 15, 2024

The ‘Magnificent Seven’ stocks have been tracking the broader stock market for three years. That group includes Amazon, Apple, Nvidia, Meta Platforms, Microsoft, AlphabetAnd Tesla.

Unfortunately, Tesla has not done its part. The shares have fallen almost 24% in those three years. It’s the only “Magnificent Seven” stock to fall in that time; the closest one, Apple, is upwards 13%.

Is it time to remove Tesla from the group? Six great companies, each with a larger market cap, could replace this.

There they are:

1. Berkshire Hathaway

Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) has become a household name due to its association with famed investor Warren Buffett, who heads it. The holding company owns several private companies, ranging from candy stores to insurance, railroads and utilities, and has a staggering stock portfolio worth hundreds of billions of dollars.

The company’s diversified collection of high-quality assets has continued to grow and outperform S&P500 indexing for decades. Importantly, Buffett built Berkshire to last: its assets include a whopping $167 billion in cash, waiting for the right opportunity to make a bargain. This company embodies long-term investment and would be a fantastic expansion of Magnificent Seven.

2. Semiconductor manufacturing in Taiwan

Nvidia, a current group member, may supply the most AI chips in the world, but… Taiwanese Semiconductor Manufacturing (TSM) (NYSE: TSM) builds them. TSM is the world’s largest semiconductor manufacturing company. It is estimated that approximately 56% of the world’s chips come from TSM. As the market leader, it’s a good bet that the advanced chips used for AI models will likely come from TSM.

That’s a great opportunity for a company with a market cap of $631 billion. AI experts believe that the demand for AI chips will skyrocket in the coming years. AMD CEO Lisa Su estimates that the global chip industry will reach $400 billion as early as 2027. Remember, Nvidia, the leader in AI chips, has made $61 billion in investments. total sales last year, so that’s a huge market growth.

3. Eli Lilly

Healthcare is a huge industry, worth an estimated $4.5 trillion in the United States alone. Why not involve one of the largest healthcare companies in the world? Eli Lilly (NYSE: LLY), in the Beautiful Seven? The pharmaceutical giant is already worth $661 billion and has significant positions in key healthcare areas including diabetes, weight management, oncology and neuroscience.

Eli Lilly, through Mounjaro and Zepbound offerings, will be able to capitalize on the growing demand for weight management medications. Analysts expect the company’s revenue to rise from $34 billion last year to $100 billion by 2032.

4. Novo Nordisk

Unfortunately, obesity is a prominent chronic condition among Americans and other developed economies around the world. Its treatment is a healthcare niche that is too big for any one company Novo Nordisk (NYSE: NVO) is right on the same level as Eli Lilly with a market cap of $585 billion. The company goes back decades to its old insulin business and owns the popular drub Ozempic, which mimics the hormones that control hunger.

Novo Nordisk is on a similarly strong growth trajectory as Eli Lilly. However, investors should note that the company is more focused on weight management than Eli Lilly, which is a more diversified company. Analysts expect Novo Nordisk’s revenue to grow from $34 billion to $78 billion by 2030.

5. Broadcom

The world is more connected than ever, and you can be partly grateful for that Broadcom (NASDAQ:AVGO) therefore. The semiconductor company makes chips that fit into most devices that connect to the Internet. It has also grown into a software company that provides technology solutions for businesses.

Broadcom’s business prospects look promising. Connectivity will only increase as emerging markets modernize and developed countries fully immerse themselves in AI. At $600 billion, this company is now a diversified tech giant and would rank well alongside Nvidia in the Magnificent Seven.

6. Visa

Money is the fundamental lifeblood of the global economy. Often, when you swipe your payment card, Visa (NYSE:V) is the company that transfers your money from your account to the seller you buy from. Visa is the world’s largest payment network. An estimated 39% of global non-cash purchases are made through the Visa network.

Society’s gradual shift from cash as a means of payment to plastic and digital payments has been of great importance to Visa. Today, the company has grown to a valuation of $563 billion. Digital payments are expected to grow at an average annual rate of 15% between last year and 2030, making Visa a potential trillion-dollar asset in the coming years.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Justin Pope has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, Nvidia, Taiwan Semiconductor Manufacturing, Tesla, and Visa. The Motley Fool recommends Broadcom and Novo Nordisk and recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.

Step aside, Tesla! These 6 Stocks Could Replace It in the “Magnificent 7” was originally published by The Motley Fool

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