Ranking the "Magnificent Seven" From Most to Least Attractive, Based on Future Cash Flow
Among Apple, Nvidia, Microsoft, Alphabet, Amazon, Meta Platforms, and Tesla, there are two sensational bargains that have embraced AI.
Ranking the Magnificent Seven from most to least attractive based on future cash flow reveals some interesting insights. Apple and Tesla, two major players in the group, are both priced for perfection according to cash flow metrics, making them less attractive options. Meanwhile, Meta Platforms and Amazon stand out as the most appealing companies in terms of future cash flow growth.
Meta Platforms, despite concerns about its sizable equity offering and AI capital expenditures, has a strong foundation in social media platforms, including Facebook, WhatsApp, and Instagram. These platforms boast an impressive average of 3.64 billion daily active users, providing Meta with exceptional ad-pricing power. Additionally, Meta's recent integration of generative AI and the launch of its agentic AI personal assistant, Muse, could further boost its growth prospects. The company also plans to sell excess compute capacity to offset its AI investment costs.
Amazon, on the other hand, demonstrates strong growth potential through its cloud infrastructure services platform, AWS. With AI and large language model capabilities integrated into AWS, the company's higher-margin operating segments have experienced a significant sales growth of 39% in recent quarters. The run rate revenue for AWS has reached nearly $184 billion, indicating a substantial increase in annual revenue.
As Amazon's higher-margin segments continue to grow, its operating cash flow is expected to soar, making it a promising investment option among the Magnificent Seven.
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