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Investors who have kept faith in the “Magnificent 7” cohort of Apple (AAPL), Alphabet (GOOGL), Tesla (TSLA), Nvidia (NVDA), Meta Platforms (META), Microsoft (MSFT), and Amazon (AMZN) have been rewarded handsomely. These companies collectively added a staggering $5.1 trillion in total market cap during 2023, and the universe of all U.S.-listed stocks would have advanced by just 12.6% last year without their influence, compared to 23.3% with their returns included.
Moreover, analysts at Bank of America continue to remain optimistic about these tech titans, which contrasts their expectations of a slowdown in the broader market. The analysts commented, "Not owning enough US stocks or large-cap stocks or Tech stocks has been a painful stance for many years, and we think it's still a major risk in 2025."
Considering this, here are three names from the coveted club that the financial services major is most bullish about.
Apple
Cupertino-based behemoth Apple (AAPL) has gone far beyond the realm of a simple tech company. Co-founded by the legendary Steve Jobs and now helmed by Tim Cook, Apple has become a consumer brand synonymous with aspirational devices and has been a part of our cultural zeitgeist for years.
The iPhone maker currently commands a staggering market cap of $3.9 trillion with its stock gaining 34% on a year-to-date basis. AAPL stock offers a dividend yield of 0.39%.
A hallmark of its dominance has been its ability to consistently grow its revenue and earnings over the years. Notably, in the past 10 years, the company has clocked revenue and earnings CAGRs of 7.90% and 9.02%, respectively.
The results for the most recent quarter saw the company report net sales of $94.9 billion, up 6.1% from the previous year, while profits of $0.97 per share dropped from the prior year's $1.47 per share. However, over the past eight quarters, Apple has beat EPS estimates on six occasions.
The liquidity position of the company remained solid as well with Apple closing the quarter with a cash balance of about $30 billion. This far exceeded its short-term debt levels of $10.9 billion.
Meanwhile, Apple was not very vocal about its artificial intelligence (AI) moves even though it remained one of the most prolific investors in AI startups between 2016 and 2020. That all changed with Apple Intelligence, which will power generative AI features across its devices. The company also said it will set a new standard for privacy when it comes to using AI through its Private Cloud Compute.
Apple Intelligence is poised to revolutionize the company's offerings, turning devices into powerful tools for search, content creation, task management, and professional writing. These AI-powered features may shorten the device replacement cycle as users upgrade their iPhones, Macs, or iPads to leverage the new capabilities. Additionally, Apple aims to create an AI-powered ecosystem, seamlessly integrating third-party software and platforms into its devices.
Health-related enhancements, like sleep apnea notifications on the Apple Watch, further strengthen its ecosystem by appealing to health-conscious consumers. At the same time, Apple is reducing reliance on suppliers by moving toward in-house manufacturing. It plans to replace Broadcom’s chips for Bluetooth and WiFi in 2025 and introduce a custom modem for the 2025 iPhone SE, set for release in May.
Lastly, the company also has its own AI Large Language Model (LLM) named Ajax, which has been trained on more than 200 billion parameters.
Thus, considering these drivers, analysts have attributed a rating of “Moderate Buy” for the stock with a mean target price that has already been surpassed. Its high target price of $300 denotes upside potential of about 16.2% from current levels. Out of 35 analysts covering the stock, 18 have a “Strong Buy” rating, 4 have a “Moderate Buy” rating, 11 have a “Hold” rating and 2 have a “Strong Sell” rating.
Alphabet
Google-parent Alphabet (GOOGL) is a holding company for its Google Search as well as various other subsidiaries including Waymo (autonomous vehicles), Verily (life sciences), and DeepMind (artificial intelligence). Google remains its largest subsidiary, dominating the search engine market and generating substantial revenue through advertising and cloud services.
Valued at an eye-watering $2.4 trillion, GOOGL stock has rallied 40% on a YTD basis, despite continuing to encounter a plethora of regulatory issues. Notably, the stock also offers a dividend yield of 0.41%.
Google's leading position in search has helped the company clock revenue and earnings CAGRs of 18.24% and 21.19%, respectively.
Encouragingly, the results for the most recent quarter saw the company reporting a beat on both the revenue and earnings front. The company reported revenues of $88.3 billion for the quarter, and operating margins improved to 32% from 28%. Increasing margins with increasing revenues reflects competitive strength. Growth in its key business segments such as Google Cloud (+35% YOY) and the other emerging businesses helped drive these results. Further, EPS grew 37% to $2.12 from the prior year, marking the seventh consecutive quarter of earnings beat.
On the liquidity front, the company closed the quarter with a cash balance of about $20 billion, more than its long-term debt of $12.3 billion.
Notably, Google's moat remains strong, anchored by its dominance in the search engine market with over 90% global share. Its continually improving search algorithm and vast database drive highly relevant results and efficient targeted advertising. Despite slight market share losses to AI-powered competitors like OpenAI and Microsoft’s Bing, Google's advertising revenue continues to grow, showcasing the resilience of its competitive edge.
The company is also heavily investing in AI and innovative ventures to adapt to shifting market dynamics. Waymo, Google's autonomous vehicle arm, now delivers over 150,000 fully autonomous trips weekly across major U.S. cities and has expanded its service area to 500 square miles.
Additionally, Google's advancements in quantum computing, such as its new chip Willow, which performed a calculation in under five minutes that would take a supercomputer 10 septillion years, open doors for monetization through Google Cloud. These efforts are further bolstered by Gemini 2.0, Google’s latest AI model, which excels at handling complex tasks with minimal human input.
Analysts have attributed an overall rating of “Strong Buy” for the stock with a mean target price of $211.86. This denotes upside potential of about 8% from current levels. Out of 50 analysts covering the stock, 40 have a “Strong Buy” rating, 3 have a “Moderate Buy” rating and 7 have a “Hold” rating.
Nvidia
We conclude our list with the poster child of AI, Nvidia (NVDA). Founded in 1993, Nvidia is a leader in specialized AI semiconductors and also supplies software. The company designs and sells graphics processing units (GPUs) for the gaming and professional markets, and system-on-a-chip (SoC) units for the mobile computing market. The company currently commands a gargantuan market cap of $3.4 trillion.
NVDA stock continues to reach new heights, zooming 183% on a YTD basis while also offering a modest dividend yield of 0.03%.
Further, as Nvidia emerged as a key player in the chip industry, its revenue and earnings also soared. Over the past 10 years, the company clocked revenue and earnings CAGRs of 37.84% and 59.72%, respectively.
Nvidia continued on its spree of reporting record quarterly revenues in Q3 2024. Revenue came in at $35.1 billion, beating estimates of $33.2 billion, and earnings per share of $0.81 beat estimates of $0.75. Net cash from operating activities rose to $17.6 billion compared to $7.3 billion in the year-ago period. Overall, Nvidia exited the quarter with a cash balance of $38.5 billion with no short-term debt on its books.
Meanwhile, Nvidia's stock remains well-positioned for continued growth, driven by innovations like its Blackwell platform, unveiled in March 2024. Blackwell promises up to 25x cost efficiency in AI model training and lower energy consumption compared to the Hopper architecture, with production underway and availability slated for 2025. Nvidia is already eyeing the next leap with Rubin, expected in 2025 or 2026. Its CUDA platform, InfiniBand networking technology, and integrated software tools like Nvidia AI and Omniverse further strengthen its competitive edge by enhancing hardware performance and fostering customer loyalty.
Looking ahead, management is confident in continued growth through 2025 and beyond. This optimism is fueled by the shift to accelerated computing, an explosion of generative AI applications, strong growth in enterprise and consumer internet sectors, and the development of sovereign AI. The company's bullishness stems from the fact that Nvidia’s chips are used for various purposes such as data centers, edge-to-cloud computing, automotive driving technology, cryptocurrency mining, and professional applications.
Taking all of this into account, analysts have assigned an overall rating of “Strong Buy” for the stock with a mean target price of $175.55 which denotes upside potential of about 25.2% from current levels. Out of 43 analysts covering the stock, 36 have a “Strong Buy” rating, 3 have a “Moderate Buy” rating and 4 have a “Hold” rating.
