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The Magnificent 7 Stocks Are the New Staples. Is It Time to Worry?

The Magnificent Seven could do no wrong in 2023 and 2024. This year, they can do no right.Only two of them— Meta Platforms and Amazon.com—are in the black this year. The big issues are sharply higher

The Magnificent 7 Stocks Are the New Staples. Is It Time to Worry?

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Is It Time to Worry?","url":"https://stock-news.laohu8.com/highlight/detail?id=1165485299","media":"Dow Jones","summary":"The Magnificent Seven could do no wrong in 2023 and 2024. This year, they can do no right.Only two of them— Meta Platforms and Amazon.com—are in the black this year. The big issues are sharply higher ","content":"<html><head></head><body><p>The Magnificent Seven could do no wrong in 2023 and 2024. This year, they can do no right.</p><p>Only two of them— Meta Platforms and Amazon.com—are in the black this year. The big issues are sharply higher capital spending plans for this year and signs of slowing growth. Then there are the potential disruptions from DeepSeek AI.</p><p>“We think it’s fair to say that this has been the softest quarter for this group collectively in the past few years,” wrote Canaccord Genuity analyst Michael Graham.</p><p>The problem is capital expenditures. Graham estimates that Alphabet, Microsoft, and Meta will spend $200 billion on artificial intelligence alone this year, consuming about 25% of collective revenue. He called that a “very large percentage, especially considering that direct AI revenue is still modest.”</p><p>Others made similar observations. “So, Alphabet forecasts cap spending at $75 billion versus previous $58 billion,” tweeted Doug Kass of Seabreeze Partners on X. “Mag 7 companies are morphing from cash cows to very capital-intensive businesses.”</p><p>Many investors focus on free cash flow, which is likely to run at less than reported earnings throughout the Mag 7 due to high capital expenditures.</p><p>Among the seven, Wall Street now has the most confidence in Meta, whose stock has risen for 15 straight sessions, finishing on Friday at $714, up 22% so far this year.</p><p>“The market is assuming that Meta is investing from a position of strength and will get a good return on its investment,” says Mark Mahaney, an analyst at Evercore ISI.</p><p>CEO Mark Zuckerberg, now a big investor favorite, has said the spending is paying off through better-targeted advertising and an improved experience for Facebook and Instagram users. Meta may spend $65 billion on capital expenditures this year, up over 60% from 2024.</p><p>Meta’s free cash flow, however, could drop 25%, to $40 billion, this year, way below its $68 billion of projected net income. That would result in a low, 2% free-cash-flow yield on the stock.</p><p>Mahaney likes Meta but prefers Alphabet, whose shares had their worst week since October 2023, on its valuation after the stock fell 9%, to $187. Meta commands about 28 times projected 2025 earnings, while Alphabet’s price/earnings ratio is 21, the lowest in the Mag 7 and in line with the market. With Alphabet, investors get a conglomerate including YouTube, cloud computing, Android, and Waymo, a leader in autonomous driving.</p><p>“It’s still Google and the dominant search engine,” Mahaney says. “There’s no material evidence that it’s losing market share.”</p><p>A while back, Mahaney coined the phrase “internet staples”—Meta, Alphabet, Amazon, and others—that have replaced the old consumer staples as market-leading growth companies. Investors might consider the fate of the actual consumer staples.</p><p>Back in the 1990s, Berkshire Hathaway CEO Warren Buffett helped popularize the leading staples stocks with his investments in Coca-Cola and Gillette. He referred to them in his 1996 annual shareholder letter as “inevitables” destined to “dominate their fields worldwide for an investment lifetime.”</p><p>Those comments probably top-ticked their dominance. Procter &amp; Gamble bought Gillette in 2005 and subsequently took sizable write-downs on the deal. Coke stock, meanwhile, has badly trailed the market since Buffett’s letter, roughly doubling in price while the S&amp;P 500 index is up sevenfold.</p><p>Conditions aren’t looking much better for them now, particularly food and beverage stocks. Growth has slowed, and investors worry about the impact of the GLP-1 diet drugs and Robert F. Kennedy Jr.’s health initiatives. Industry leaders PepsiCo, Mondelez International, Hershey, and Kraft Heinz are down 15% to 20% over the past 12 months and trade with their lowest P/E multiples in years. Kraft now yields over 5%, and Pepsi nearly 4%.</p><p>TD Cowen analyst Robert Moskow remains unenthusiastic about many of the food stocks, citing weak trends in scanner data from stores. “For a variety of reasons, there could be an acceleration in the consumer desire for healthier foods,” he says.</p><p>The Mag 7 now represent almost 35% of the S&amp;P 500, and they matter far more than staples stocks. Let’s hope their underperformance isn’t the start of a similar period of decline.</p></body></html>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>The Magnificent 7 Stocks Are the New Staples. 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Is It Time to Worry?\n</h2>\n\n<h4 class=\"meta\">\n\n\n<a class=\"head\" href=\"https://laohu8.com/wemedia/1012688067\">\n\n\n<div class=\"h-thumb\" style=\"background-image:url(https://static.tigerbbs.com/150f88aa4d182df19190059f4a365e99);background-size:cover;\"></div>\n\n<div class=\"h-content\">\n<p class=\"h-name\">Dow Jones </p>\n<p class=\"h-time\">2025-02-08 08:59</p>\n</div>\n\n</a>\n\n\n</h4>\n\n</header>\n<article>\n<html><head></head><body><p>The Magnificent Seven could do no wrong in 2023 and 2024. This year, they can do no right.</p><p>Only two of them— Meta Platforms and Amazon.com—are in the black this year. The big issues are sharply higher capital spending plans for this year and signs of slowing growth. Then there are the potential disruptions from DeepSeek AI.</p><p>“We think it’s fair to say that this has been the softest quarter for this group collectively in the past few years,” wrote Canaccord Genuity analyst Michael Graham.</p><p>The problem is capital expenditures. Graham estimates that Alphabet, Microsoft, and Meta will spend $200 billion on artificial intelligence alone this year, consuming about 25% of collective revenue. He called that a “very large percentage, especially considering that direct AI revenue is still modest.”</p><p>Others made similar observations. “So, Alphabet forecasts cap spending at $75 billion versus previous $58 billion,” tweeted Doug Kass of Seabreeze Partners on X. “Mag 7 companies are morphing from cash cows to very capital-intensive businesses.”</p><p>Many investors focus on free cash flow, which is likely to run at less than reported earnings throughout the Mag 7 due to high capital expenditures.</p><p>Among the seven, Wall Street now has the most confidence in Meta, whose stock has risen for 15 straight sessions, finishing on Friday at $714, up 22% so far this year.</p><p>“The market is assuming that Meta is investing from a position of strength and will get a good return on its investment,” says Mark Mahaney, an analyst at Evercore ISI.</p><p>CEO Mark Zuckerberg, now a big investor favorite, has said the spending is paying off through better-targeted advertising and an improved experience for Facebook and Instagram users. Meta may spend $65 billion on capital expenditures this year, up over 60% from 2024.</p><p>Meta’s free cash flow, however, could drop 25%, to $40 billion, this year, way below its $68 billion of projected net income. That would result in a low, 2% free-cash-flow yield on the stock.</p><p>Mahaney likes Meta but prefers Alphabet, whose shares had their worst week since October 2023, on its valuation after the stock fell 9%, to $187. Meta commands about 28 times projected 2025 earnings, while Alphabet’s price/earnings ratio is 21, the lowest in the Mag 7 and in line with the market. With Alphabet, investors get a conglomerate including YouTube, cloud computing, Android, and Waymo, a leader in autonomous driving.</p><p>“It’s still Google and the dominant search engine,” Mahaney says. “There’s no material evidence that it’s losing market share.”</p><p>A while back, Mahaney coined the phrase “internet staples”—Meta, Alphabet, Amazon, and others—that have replaced the old consumer staples as market-leading growth companies. Investors might consider the fate of the actual consumer staples.</p><p>Back in the 1990s, Berkshire Hathaway CEO Warren Buffett helped popularize the leading staples stocks with his investments in Coca-Cola and Gillette. He referred to them in his 1996 annual shareholder letter as “inevitables” destined to “dominate their fields worldwide for an investment lifetime.”</p><p>Those comments probably top-ticked their dominance. Procter &amp; Gamble bought Gillette in 2005 and subsequently took sizable write-downs on the deal. Coke stock, meanwhile, has badly trailed the market since Buffett’s letter, roughly doubling in price while the S&amp;P 500 index is up sevenfold.</p><p>Conditions aren’t looking much better for them now, particularly food and beverage stocks. Growth has slowed, and investors worry about the impact of the GLP-1 diet drugs and Robert F. Kennedy Jr.’s health initiatives. Industry leaders PepsiCo, Mondelez International, Hershey, and Kraft Heinz are down 15% to 20% over the past 12 months and trade with their lowest P/E multiples in years. Kraft now yields over 5%, and Pepsi nearly 4%.</p><p>TD Cowen analyst Robert Moskow remains unenthusiastic about many of the food stocks, citing weak trends in scanner data from stores. “For a variety of reasons, there could be an acceleration in the consumer desire for healthier foods,” he says.</p><p>The Mag 7 now represent almost 35% of the S&amp;P 500, and they matter far more than staples stocks. Let’s hope their underperformance isn’t the start of a similar period of decline.</p></body></html>\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"AMZN":"亚马逊","GOOG":"谷歌","TSLA":"特斯拉","META":"Meta Platforms, Inc.","NVDA":"英伟达","MSFT":"微软","AAPL":"苹果"},"source_url":"","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1165485299","content_text":"The Magnificent Seven could do no wrong in 2023 and 2024. This year, they can do no right.Only two of them— Meta Platforms and Amazon.com—are in the black this year. The big issues are sharply higher capital spending plans for this year and signs of slowing growth. Then there are the potential disruptions from DeepSeek AI.“We think it’s fair to say that this has been the softest quarter for this group collectively in the past few years,” wrote Canaccord Genuity analyst Michael Graham.The problem is capital expenditures. Graham estimates that Alphabet, Microsoft, and Meta will spend $200 billion on artificial intelligence alone this year, consuming about 25% of collective revenue. He called that a “very large percentage, especially considering that direct AI revenue is still modest.”Others made similar observations. “So, Alphabet forecasts cap spending at $75 billion versus previous $58 billion,” tweeted Doug Kass of Seabreeze Partners on X. “Mag 7 companies are morphing from cash cows to very capital-intensive businesses.”Many investors focus on free cash flow, which is likely to run at less than reported earnings throughout the Mag 7 due to high capital expenditures.Among the seven, Wall Street now has the most confidence in Meta, whose stock has risen for 15 straight sessions, finishing on Friday at $714, up 22% so far this year.“The market is assuming that Meta is investing from a position of strength and will get a good return on its investment,” says Mark Mahaney, an analyst at Evercore ISI.CEO Mark Zuckerberg, now a big investor favorite, has said the spending is paying off through better-targeted advertising and an improved experience for Facebook and Instagram users. Meta may spend $65 billion on capital expenditures this year, up over 60% from 2024.Meta’s free cash flow, however, could drop 25%, to $40 billion, this year, way below its $68 billion of projected net income. That would result in a low, 2% free-cash-flow yield on the stock.Mahaney likes Meta but prefers Alphabet, whose shares had their worst week since October 2023, on its valuation after the stock fell 9%, to $187. Meta commands about 28 times projected 2025 earnings, while Alphabet’s price/earnings ratio is 21, the lowest in the Mag 7 and in line with the market. With Alphabet, investors get a conglomerate including YouTube, cloud computing, Android, and Waymo, a leader in autonomous driving.“It’s still Google and the dominant search engine,” Mahaney says. “There’s no material evidence that it’s losing market share.”A while back, Mahaney coined the phrase “internet staples”—Meta, Alphabet, Amazon, and others—that have replaced the old consumer staples as market-leading growth companies. Investors might consider the fate of the actual consumer staples.Back in the 1990s, Berkshire Hathaway CEO Warren Buffett helped popularize the leading staples stocks with his investments in Coca-Cola and Gillette. He referred to them in his 1996 annual shareholder letter as “inevitables” destined to “dominate their fields worldwide for an investment lifetime.”Those comments probably top-ticked their dominance. Procter & Gamble bought Gillette in 2005 and subsequently took sizable write-downs on the deal. Coke stock, meanwhile, has badly trailed the market since Buffett’s letter, roughly doubling in price while the S&P 500 index is up sevenfold.Conditions aren’t looking much better for them now, particularly food and beverage stocks. Growth has slowed, and investors worry about the impact of the GLP-1 diet drugs and Robert F. Kennedy Jr.’s health initiatives. Industry leaders PepsiCo, Mondelez International, Hershey, and Kraft Heinz are down 15% to 20% over the past 12 months and trade with their lowest P/E multiples in years. Kraft now yields over 5%, and Pepsi nearly 4%.TD Cowen analyst Robert Moskow remains unenthusiastic about many of the food stocks, citing weak trends in scanner data from stores. “For a variety of reasons, there could be an acceleration in the consumer desire for healthier foods,” he says.The Mag 7 now represent almost 35% of the S&P 500, and they matter far more than staples stocks. Let’s hope their underperformance isn’t the start of a similar period of decline.","news_type":1},"isVote":1,"tweetType":1,"viewCount":57,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":10,"optionInvolvedFlag":false,"xxTargetLangEnum":"ORIG"},"commentList":[],"hasMoreComment":false,"orderType":2}