After leading the bull market higher for the better part of two years, the mega-cap tech stocks known as the Magnificent Seven have been among those hit hardest in the ongoing selloff roiling the US stock market. As a result, these formerly ultra-expensive stocks seem less pricey. Some even look cheap enough for Morningstar analysts to call them buys.
The Magnificent Seven—Nvidia NVDA, Meta Platforms META, Apple AAPL, Amazon AMZN, Microsoft MSFT, Alphabet GOOGL/GOOG, and Tesla TSLA—have dominated in recent years.
A Morningstar analyst evaluates a stock by comparing its current price to their estimate of its intrinsic worth, or fair value. A price/fair value ratio higher than 1 indicates a stock is overvalued, or expensive, while a ratio under 1 indicates that it’s undervalued, or cheap. The chart below shows how the price/fair value ratios of the Magnificent Seven have changed over the past six months. All but Apple are now trading in fairly valued or undervalued territory—a major change from last year.
The Magnificent Seven Falter
Seemingly insatiable investor appetite for artificial intelligence and growth propelled the Magnificent Seven higher in 2023 and 2024. They grew significantly more expensive than the rest of the market, but investors appeared willing to pay that premium, thanks to powerful earnings growth and optimism surrounding AI.
But with slowing economic growth and policy uncertainty, 2025 brought major changes for the stock market. The mega-cap tech trade began to unwind as investors sought opportunities in other areas, and the Magnificent Seven lost momentum. New AI developments from China also weighed on the group.
Now, with a selloff in full swing and the Morningstar US Market Index down more than 4.5% for the year, the Magnificent Seven are leading the market lower. Nvidia has fallen more than 20% in 2025, while shares of Tesla have lost an eyewatering 45%. Only Meta has remained in the green for the year.
Which Magnificent Seven Stocks Are Buys?
Today, four of the Magnificent Seven are rated 4 stars by Morningstar analysts, meaning they’re considered undervalued: Meta, Amazon, Microsoft, and Alphabet. Alphabet is currently trading at the largest discount (30%).
Tesla has fallen into fairly valued territory after trading in overvalued territory for much of the last six months. Nvidia is also considered fairly valued. Only Apple remains overvalued.
With more market volatility likely on the horizon, investors should remember that cheaper price tags don’t necessarily mean a stock is a good buy. In the case of Tesla, Morningstar strategist Seth Goldstein says that while shares are now fairly valued, “we recommend investors wait for a larger margin of safety before considering an entry point.” He points to elevated risk for the stock.
And overall, Morningstar strategists still recommend underweighting growth stocks. “We think the rotation into value stocks still has room to run,” says Morningstar chief US market strategist Dave Sekera. “Not only are value stocks more attractively valued, we think the rotation into value will pick up steam as the economy slows and growth stocks’ earnings growth begins to slow.”
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
