Not Nvidia. Not Microsoft. This "Magnificent Seven" Stock Is the Cheapest Right Now.
2026-10-25 17:30
•James Brumley •The Motley Fool
••••• •••••••••• Axe Cap view
Alphabet Stands Out as Cheapest of the Magnificent Seven
Alphabet trades at a more reasonable valuation than its tech peers and has a more stable revenue base amid AI hype.
While Nvidia and Microsoft often steal the spotlight in AI, Alphabet quietly offers a more balanced risk-reward profile. Its forward price-to-earnings ratio of 21.7 times places it cheaper than the 'Magnificent Seven' heavyweights, many of which are priced for near-perfect growth. Alphabet’s steady cash flow from search advertising and a massive $514 billion Google Cloud backlog give it resilience against the boom-bust nature of tech investing. This diversity means it can fund AI development without relying solely on speculative growth. For South African investors, Alphabet’s US dollar strength and cloud leadership hint at indirect benefits, especially when considering USD/ZAR exposure. That said, should cloud competition intensify or regulatory pressures ramp up, Alphabet’s cushion could be tested. this is just our opinion and not financial advice
Buy Alphabet as a core US tech holding through offshore exposure or structured products, favoring its blend of stability and growth. Keep an eye on USD/ZAR moves, since currency swings will materially impact returns.
- GOOG
- USD/ZAR
- Rising cloud sector competition
- Increased US and EU regulatory scrutiny
6/10
Among the Magnificent Seven tech stocks, Alphabet emerges as the cheapest valuation option at 21.7x forward P/E (excluding one-time gains). Despite appearing expensive on surface metrics, Alphabet's diversified revenue streams, particularly its reliable search advertising business and growing Google Cloud with a $514 billion backlog, position it better to weather industry headwinds compared to peers like Nvidia, Microsoft, and Amazon.
Our take is based on reporting first published by The Motley Fool.
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