The Magnificent Seven stocks — Amazon.com, Apple, Google parent Alphabet, Meta Platforms, Microsoft, Nvidia and Tesla — generally paused or retreated last week, as small caps and sectors such as industrials, construction, financials and travel took up the slack.
But this could be constructive. The Magnificent Seven stocks had hefty November gains, with many looking extended even if they were technically in buy zones. So a pause for several days or even weeks could forge more-attractive entries.
Microsoft and AMZN stock on Monday have dropped out of buy zones. Nvidia and Meta stock are falling further from buy points. Apple stock is not far from a buy point. Tesla stock is not far from an early entry, but is testing key support. Google stock technically still has a handle buy point, but has fallen well below a key level.
Nvidia and Microsoft are at the forefront of the AI boom, but Meta, Google and Amazon are making their own AI push. Tesla claims it'll be a big AI player. Apple hasn't stressed AI, though CEO Tim Cook has said the company is "investing quite a bit."
Just because these Magnificent Seven stocks are in or near buy zones doesn't mean investors have to take advantage. With the market rally broadening out, investors may want diversify away from megacaps.
Amazon stock, Microsoft, Nvidia and Meta Platforms are on IBD Leaderboard. MSFT stock is on the IBD Long-Term Leaders list. Nvidia stock, Meta and Microsoft are on the IBD 50. Microsoft stock is on the IBD Big Cap 20.
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Microsoft Stock
MSFT stock hit a record 384.30 on Wednesday, but reversed lower. Shares finished last week down 0.8% to 374.51.
On Monday, Microsoft undercut the 366.78 cup-base buy point intraday, but rallied to close above that level and the 21-day line. Microsoft stock is now just 6.8% above the 50-day line. Investors could buy the Dow Jones giant, though they might want to wait to see if it forges a high handle or short consolidation.
The relative strength line, which tracks a stock's performance vs. the S&P 500 index, has fallen in the past few days but is near highs. The RS line is the blue line in the charts provided.
Microsoft earnings and sales growth have accelerated modestly for the past three quarters.
Amazon Stock
Amazon stock fell 1.5%, dropping below a 145.86 consolidation buy point, according to MarketSmith analysis. AMZN stock closed near session highs, bouncing off the 21-day line. Shares are now 7.1% above a rising 50-day line.
The RS line is slightly below 52-week highs.
Nvidia Stock
NVDA stock fell 2.7% on Monday to test the 50-day line. Shares slipped 2.1% last week after a 3.1% drop in the prior week. NVDA stock is now significantly below a 476.09 double-bottom buy point as well as the 21-day line. The buy point is still actionable, though Nvidia may need to forge a new base.
There have been a number of down days in the past couple of weeks, with a few more in late October. There's only been one up day in above-average volume since the end of August. So the Accumulation/Distribution Rating is a worst-possible E.
Over the past several quarters, Nvidia earnings growth has gone from -50% to -33% and -20% to up 429% and 593%. Sales gains have turned from -17%, -21% and -13% to up 101% and 206%.
While Nvidia is the clear AI chip leader, others seek to challenge that dominance. Microsoft and Amazon have recently unveiled their own AI chips to lessen their dependence on Nvidia GPUs. Nvidia rival Advanced Micro Devices will hold an Advancing AI event on Wednesday.
Meta Stock
Meta stock fell 1.5% Monday, but came off lows after undercutting the 50-day line intraday. Shares sank nearly 4% last week, dropping below the 326.20 consolidation buy point. That's still a valid entry, though investors might wait to see Meta Platforms consolidates, if only for a short time.
Earnings have turned from -52% to 168% in just three quarters, with revenue shifting from -4% to 23% growth.
Magnificent Seven: Apple Stock
Apple stock fell nearly 1% on Monday, but came off lows near the 21-day line. Shares are working on a 192.93 cup-with-handle buy point. Monday's intraday dip was constructive, making a tiny handle a little bit deeper.
AAPL stock has a $2.95 billion market cap. That's the world's highest valuation, though fellow Magnificent Seven stock and Dow Jones component MSFT isn't far behind. Apple has never closed with a $3 trillion valuation.
Apple earnings growth has slowly accelerated over the past three quarters to 13% in the September-ended fiscal fourth quarter, but sales have fallen vs. a year earlier for the past four quarters.
Tesla Stock
Tesla stock rose 1.4% to 238.83 last week, the only Magnificent Seven stock to outpace the S&P 500. Shares pulled back from Wednesday's intraday high of 252.75, but rebounded slightly from the 50-day on Friday.
On Monday, shares fell 1.4%, but closed just above the 50-day line. A move above Wednesday's high would offer an early entry. TSLA stock has an official 278.98 double-bottom buy point.
The RS line for Tesla sock has bounced a little over the past month, but is still trending lower from July's 2023 highs.
Last week, Tesla delivered its first Cybertruck EVs, handing over a dozen. The EV giant also released estimated prices and battery ranges, which appeared to be slightly disappointing.
Tesla earnings have slumped in 2023, tumbling 37% in Q3 vs. a year earlier, amid heavy and ongoing price cuts and discounts. Revenue could fall vs. a year earlier in 2023. Analysts see a growth rebound next year, but have slashed 2024 estimates throughout 2023.
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Google Stock
GOOGL stock skidded nearly 2% Monday. Shares already slumped 3.5% to 131.86 last week, falling below the 50-day line. The search giant still has a 139.42 cup-with-handle buy point. But Google stock has a number of high-volume down days. Its Accumulation/Distribution Rating is a dismal D-.
The RS line for GOOGL stock has slumped to a four-month low.
Google earnings growth has picked up from -19% and -11% to 17% and 42%. Sales gains have improved from 1% to 3%, 7% and 11% over that period.
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