The Magnificent Seven stocks, Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), Meta Platforms (NASDAQ:META), Nvidia (NASDAQ:NVDA), and Tesla (NASDAQ:TSLA), are technology-focused mega-cap companies that have rewarded investors with impressive returns over the past few years. Using TipRanks’ Stock Comparison Tool, we placed Microsoft, Tesla, and Nvidia against each other to pick the most attractive stock from these three Magnificent Seven Stocks.
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Microsoft (NASDAQ:MSFT)
Software giant Microsoft is one of the frontrunners in the generative AI (artificial intelligence) race, thanks to its significant investments in ChatGPT-creator OpenAI and other AI projects. The company has been integrating AI into its workplace collaboration tools and other offerings, boosting their attractiveness to users.
MSFT’s AI efforts have boosted its market capitalization beyond the $3 trillion mark, reflecting investors’ bullish sentiment on the company’s AI ambitions. Shares have rallied 32% in the past year.
The company’s recently reported results for Q3 Fiscal 2024 bolstered investors’ confidence. In particular, revenue from the company’s cloud computing platform Azure and other cloud services grew 31%. The generative AI boom is expected to further boost Azure’s growth.
Is Microsoft a Buy or Sell?
Following MSFT’s Q1 print, Piper Sandler analyst Brent Bracelin raised his price target to $465 from $455 and reaffirmed a Buy rating on the stock. The analyst attributed his higher price target to robust AI and cloud secular tailwinds that contributed to accelerating Azure revenue growth.
Bracelin is bullish on MSFT due to accelerating growth and the leadership’s commitment to sustain more than 43% operating margin next year despite a peak capital expenditure cycle.
Microsoft scores a Strong Buy consensus rating based on 31 Buys, one Hold, and one Sell rating. The average MSFT stock price target of $489.56 implies nearly 20% upside potential.
Tesla (NASDAQ:TSLA)
Shares of electric vehicle (EV) maker Tesla have plunged over 28% year-to-date, reflecting investors’ concerns over the company’s declining margins amid rising competition in the EV space and the impact of macro pressures on demand.
The company’s Q1 revenue declined 9% to $21.3 billion due to lower deliveries. Moreover, CEO Elon Musk cautioned that the volume growth rate may be notably lower this year than the growth rate witnessed in 2023.
Tesla supporters continue to be optimistic about the company’s long-term growth potential based on its technology, manufacturing capabilities, and the prospects for its Full Self-Driving (FSD) capability. However, many analysts remain skeptical about the company due to several reasons, including intense rivalry in the EV space.
What is the Target Price for Tesla Stock?
On April 29, Evercore analyst Chris McNally lowered his price target for Tesla stock to $145 from $155 and reiterated a Hold rating. The analyst cut his price target to reflect his reduced earnings expectations, given further volume and gross margin reductions. McNally now expects EPS of over $4.50 in FY27, down from his prior estimate of about $5-$6.
Reacting to Tesla’s announcement that it will pull forward the launch of additional new models to late 2024/2025, McNally raised doubts about how much additional demand can be generated by offering only a slightly cheaper or slightly altered product.
Overall, Wall Street has a Hold consensus rating on Tesla stock based on eight Buys, 15 Holds, and nine Sells. The average TSLA stock price target of $173.29 implies a potential downside of 2.5% from the current levels.
Nvidia (NASDAQ:NVDA)
Nvidia stock has skyrocketed about 216% in the past year, thanks to stellar demand for the company’s advanced graphics processing units (GPUs), which are needed to build and train generative AI models. The company is massively benefiting from the generative AI wave, as reflected in its massive revenue and earnings growth rates in recent quarters.
NVDA is scheduled to report its results for the first quarter of Fiscal 2025 on May 22. Analysts expect the company’s EPS to jump to $5.59 from $1.09 in the prior-year quarter. Wall Street projects the significant rise in NVDA’s earnings to be driven by about a 242% rise in the Q1 revenue to $24.57 billion.
Given Nvidia’s dominance in the AI chip market and the growing interest in generative AI across the world, most analysts are optimistic about the continued strength in the company’s financials. Looking ahead, the launch of the company’s next generation of AI chips, called Blackwell, is expected to be a key catalyst for the stock later this year.
Is NVDA a Good Buy Right Now?
On Tuesday, Goldman Sachs analyst Toshiya Hari increased his price target for NVDA stock to $1,100 from $1,000 and reiterated a Buy rating. The analyst raised his earnings estimates for Fiscal 2025 to 2027 by 8% on average. The company increased its earnings estimates and price target to reflect “robust” AI server demand and improved supply.
The analyst expects positive EPS estimate revisions to drive the stock higher.
With 39 Buys and two Holds, Nvidia has a Strong Buy consensus rating. At $1,005.59, the average NVDA stock price target indicates 11.1% upside potential.
Conclusion
Among the three Magnificent Seven stocks discussed here, Wall Street is highly bullish on Microsoft and Nvidia but sidelined on Tesla. Currently, analysts see higher upside potential in Microsoft, backed by its AI-related growth potential.
