It’s hard to avoid the buzz about the Magnificent Seven companies, which represent some of the largest tech titans in the U.S. markets. Indeed, the Magnificent Seven also happen to be some of the biggest spenders when it comes to artificial intelligence (AI), whether we’re talking about infrastructure (think AI data centres) or research and development to produce better, more powerful, or even more efficient models.
With the rise of reasoning (or thinking) models and ultra-low-cost, light models (think DeepSeek, which punched China’s ticket to the great AI boom), I think that most investors should at least think about getting serious about their portfolio’s long-term AI exposure. Now, does that mean you need to be in the hottest AI data centre stock or an AI software name that could surge by double-digit percentage points over a near-term timespan?
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Are the Magnificent Seven stocks essential AI plays for Canadians?
Unless you’re comfortable with the boom-and-bust nature of momentum plays, I think the Magnificent Seven names are a perfect balance between decent valuations and top-of-the-line AI dominance. Of course, it’s difficult to say which firms will ultimately win by the most as the AI boom matures. And while some of the Magnificent Seven members may be markedly pricer than the pack, I still think they’re worth keeping on your radar in case the right price of admission shows itself, perhaps after a broad stock market correction.
With the Canadian dollar just north of US$0.70, it still seems like a rough time to be a net buyer of U.S. stocks. Indeed, perhaps the “buy Canadian” phrase that many retailers have been touting also applies to Canadian stocks, given the less-than-favourable exchange rate, which may or may not get better over the next year or two, especially if those 25% tariffs come online sooner rather than later.
In any case, I think the painful exchange of loonies for greenbacks is worth the while if it means getting a good price on a truly magnificent business that could act as a core holding for your TFSA (Tax-Free Savings Account). Here is one Magnificent Seven stock that I think is essential as the AI boom continues to progress through 2025.
Apple
Apple (NASDAQ:AAPL) stock has been on a turbulent ride to start the year. The Magnificent Seven member hasn’t been the hottest name in recent years, given some investors are inclined to label it as “behind” in AI. The first launch of Apple Intelligence hasn’t blown away the masses.
However, the best updates still have yet to come, and with its unavailability in certain markets (think China), I think it’s wrong to dismiss Apple as a laggard on AI. The company will probably catch up with rivals in China; it’s just a matter of when.
With a new AI partner in China, it will be interesting to see if the iPhone can finally gain some share back. With a new iPhone SE to launch and Apple Intelligence updates in the cards, I think it’s tough to keep this innovative titan down for very long, as Apple’s AI becomes available to more than just the “Pro” users. All considered, I think it’s an exciting year for Apple as it looks to leap over what I view as a low expectations “bar” in coming quarters.
The bottom line
Apple stands out as a great Magnificent Seven stock to stash away for years as it looks to get AI right in 2025. The stock goes for 38.7 times the trailing price to earnings, which seems reasonable, given the potential for an AI-driven upgrade cycle that may begin with the iPhone 17.
