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Nasdaq Correction: Hold These 3 Mag-7 Stocks Instead of Letting Go
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In recent trading sessions, Wall Street witnessed a bloodbath, with the “Magnificent Seven” stocks dragging the Nasdaq lower. Yet, it’s still wise to have faith in three of them. Let’s explore why –
Nasdaq Sell-Off Explained
Officially, the Nasdaq entered correction territory on Monday after tanking over 10% from its December peak. The tech-laden index also witnessed a choppy trading session on Tuesday, which ended in the red.
Concerns of an imminent recession, ongoing tariff war with Europe, Mexico, and Canada, and the possibility of a government shutdown dragged Nasdaq lower, mostly led by the so-called “Magnificent Seven” stocks. Elevated stock valuations to historical averages also raised apprehensions among investors.
Why It’s Wise to Hold Onto Alphabet, Amazon, & NVIDIA
Investors shouldn’t get perturbed about the recent Nasdaq sell-off led by the “Magnificent Seven.” Instead, they should consider holding onto Alphabet Inc. (GOOGL - Free Report) , Amazon.com, Inc. (AMZN - Free Report) and NVIDIA Corporation (NVDA - Free Report) for potential gains soon. Let’s see why –
Alphabet – Solid Google Cloud & Services Segment
Alphabet is one of the major players in the cloud computing field. Its Google Cloud segment witnessed a jump in revenues and operating income in the fourth quarter, marking a shift toward profitability and potential future expansion.
The Google Cloud division benefits from customers’ artificial intelligence (AI) model initiatives. Alphabet, in reality, has developed a custom AI chip. Alphabet aims to capitalize on the AI growth opportunities and intends to spend $75 billion this year to build data centers, up from $52.5 billion last year.
The Google Services segment also saw a double-digit increase in revenues in the fourth quarter. This division is expected to grow further as the YouTube streaming platform becomes the most-watched video platform worldwide, while Google Search remains the leading digital advertising platform globally in terms of revenues. As a result, the company’s expected earnings growth rate for the current year is 10.7%.
Amazon – AWS is a Profitable Unit
Like Alphabet, Amazon’s cloud computing business is generating substantial profits for the company. Amazon Web Services (AWS) soared 19% last quarter and is now the fastest-growing segment. Amazon’s Bedrock services are helping customers to choose their own AI models while SageMaker services train these models.
Amazon, meanwhile, has spent over $100 billion on AI infrastructure and created its own customer AI chip to lower costs, working alongside graphic processing units (GPUs). Anyhow, Amazon’s ad businesses have higher margins, and its e-commerce business is humming. Consequently, the company’s current-year earnings growth rate is expected to be 14.3%.
NVIDIA – GPU Dominance & High Demand for Blackwell Chips
NVIDIA’s CUDA software platform is in more demand among developers than Advanced Micro Devices, Inc.’s (AMD - Free Report) ROCm software platform. At the same time, NVIDIA continues to be a market leader in the GPU space, giving the company a competitive edge.
NVIDIA’s new Blackwell chips, known for their efficiency and fast AI interface, experienced high demand last quarter and are expected to experience strong demand in the future. Its older Hopper chips are in demand, confirmed CEO Jensen Huang.
DeepSeek’s cost-friendly large language model threat, though exaggerated, won’t significantly affect NVIDIA in the long term. Instead, NVIDIA is equipped to develop cost-effective products and support AI growth. So, the company’s estimated earnings growth rate for the current year is 46.8%.
Image: Bigstock
Nasdaq Correction: Hold These 3 Mag-7 Stocks Instead of Letting Go
In recent trading sessions, Wall Street witnessed a bloodbath, with the “Magnificent Seven” stocks dragging the Nasdaq lower. Yet, it’s still wise to have faith in three of them. Let’s explore why –
Nasdaq Sell-Off Explained
Officially, the Nasdaq entered correction territory on Monday after tanking over 10% from its December peak. The tech-laden index also witnessed a choppy trading session on Tuesday, which ended in the red.
Concerns of an imminent recession, ongoing tariff war with Europe, Mexico, and Canada, and the possibility of a government shutdown dragged Nasdaq lower, mostly led by the so-called “Magnificent Seven” stocks. Elevated stock valuations to historical averages also raised apprehensions among investors.
Why It’s Wise to Hold Onto Alphabet, Amazon, & NVIDIA
Investors shouldn’t get perturbed about the recent Nasdaq sell-off led by the “Magnificent Seven.” Instead, they should consider holding onto Alphabet Inc. (GOOGL - Free Report) , Amazon.com, Inc. (AMZN - Free Report) and NVIDIA Corporation (NVDA - Free Report) for potential gains soon. Let’s see why –
Alphabet – Solid Google Cloud & Services Segment
Alphabet is one of the major players in the cloud computing field. Its Google Cloud segment witnessed a jump in revenues and operating income in the fourth quarter, marking a shift toward profitability and potential future expansion.
The Google Cloud division benefits from customers’ artificial intelligence (AI) model initiatives. Alphabet, in reality, has developed a custom AI chip. Alphabet aims to capitalize on the AI growth opportunities and intends to spend $75 billion this year to build data centers, up from $52.5 billion last year.
The Google Services segment also saw a double-digit increase in revenues in the fourth quarter. This division is expected to grow further as the YouTube streaming platform becomes the most-watched video platform worldwide, while Google Search remains the leading digital advertising platform globally in terms of revenues. As a result, the company’s expected earnings growth rate for the current year is 10.7%.
Amazon – AWS is a Profitable Unit
Like Alphabet, Amazon’s cloud computing business is generating substantial profits for the company. Amazon Web Services (AWS) soared 19% last quarter and is now the fastest-growing segment. Amazon’s Bedrock services are helping customers to choose their own AI models while SageMaker services train these models.
Amazon, meanwhile, has spent over $100 billion on AI infrastructure and created its own customer AI chip to lower costs, working alongside graphic processing units (GPUs). Anyhow, Amazon’s ad businesses have higher margins, and its e-commerce business is humming. Consequently, the company’s current-year earnings growth rate is expected to be 14.3%.
NVIDIA – GPU Dominance & High Demand for Blackwell Chips
NVIDIA’s CUDA software platform is in more demand among developers than Advanced Micro Devices, Inc.’s (AMD - Free Report) ROCm software platform. At the same time, NVIDIA continues to be a market leader in the GPU space, giving the company a competitive edge.
NVIDIA’s new Blackwell chips, known for their efficiency and fast AI interface, experienced high demand last quarter and are expected to experience strong demand in the future. Its older Hopper chips are in demand, confirmed CEO Jensen Huang.
DeepSeek’s cost-friendly large language model threat, though exaggerated, won’t significantly affect NVIDIA in the long term. Instead, NVIDIA is equipped to develop cost-effective products and support AI growth. So, the company’s estimated earnings growth rate for the current year is 46.8%.
While NVIDIA has a Zacks Rank #2 (Buy), Alphabet and Amazon have a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.