Magnificent Seven Stocks Can Still Generate Upside

After a stellar 2023, the magnificent seven are mixed through the first two months of 2024. Nvidia (NVDA) is on a breathtaking pace higher while Microsoft (NASDAQ: MSFT) is up 10%. Helped by impressive earnings and a dividend initiation, Facebook parent Meta Platforms (NASDAQ: META) jumped more than 38% to start the year.

Conversely, Apple (NASDAQ: AAPL) is in the red. Alphabet (NASDAQ: GOOG) was recently stung by some bad PR related to its generative artificial intelligence (AI) platform and Tesla (NASDAQ: TSLA) has struggled so much (down almost 19% this year) that there’s been talk of removing it from the magnificent seven.

However, market observers remain broadly bullish on the magnificent seven and speaking of AI, that’s widely viewed as one of the primary catalysts that drive those stocks and exchange traded funds, including the Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM), higher.

Catalysts Still There for Magnificent Seven

AI has been a significant catalyst for Nvidia and other semiconductor producers residing in QQQ and QQQM. However, those ETFs aren’t dedicated chip funds. The good news is there’s much more to the AI ecosystem and the related investment thesis than chips.

“The commercialization of AI will require customized solutions across software, infrastructure and cybersecurity, areas where general purpose models (like ChatGPT) often fall short. This ongoing progress of business discovery, implementation and reorganization will dominate the next 5+ years in AI, revealing winners that may not even be familiar to us yet,” according to JPMorgan Asset Management.

In other words, investors shouldn’t just focus on chipmakers when it comes to AI. They need to embrace strategies that meet the demands of a rapidly evolving AI industry. QQQ and QQQM are up to those tasks.