The Mag 7 Just Hit the Buy Zone — Here's the Ranking
The seven most important stocks on Earth are trading at their cheapest growth-adjusted multiples in years. The AI capex overhang is real. The earnings are realer. Here's the full scorecard.
The Mag 7 are rarely cheap all at once. Right now, five of the seven trade below 26x forward earnings. But they're sitting on a knife's edge: the same AI capex that makes them cheap is what scares the market. $2.3 trillion was erased from Mag 7 market caps in June alone — the worst month since 2022. The question isn't whether they're cheap. It's whether the spending pays off.
The Capex Wall: $820B in 2026, $1.2T in 2027
This is the number that's spooking everyone. According to Morgan Stanley, aggregate hyperscaler capex is tracking to $820B in 2026 and $1.2 trillion in 2027.
David Rosenberg, who called the 2008 recession, says the Mag 7 has "already rolled over." His tripwire: watch for a Cisco-style guidance miss from any mega-cap. That's the signal a rotation becomes a regime change.
But the flip side: UBS says "bottlenecks in the AI supply chain show no signs of abating" and expects cloud revenue to accelerate through year-end. HSBC called blowout Micron earnings "hard evidence for an AI backdrop that is alive and healthy."
The Scorecard: Valuation + Quality + Forward View
| Rank | Ticker | Price | Fwd P/E | PEG | Rev Grw | Op Mgn | FCF Mgn | Capex/Rev | Mgmt Signal |
|---|---|---|---|---|---|---|---|---|---|
| 1 | NVDA | $207 | 16.6x | 0.65 | 85% | 65.6% | 59.5% | 5% | Revenue +85% YoY; Rubin GPU ramping; $49B FCF record |
| 2 | META | $669 | 18.8x | 0.96 | 33% | 40.6% | 23.5% | 28% | Ad rev +33%; 3.5B daily users; Louisiana DC could hit $250B |
| 3 | MSFT | $402 | 20.4x | 1.19 | 18% | 46.3% | 19.1% | 37% | AI ARR $37B (+123%); 20M Copilot seats; Maia 200 live |
| 4 | GOOGL | $372 | 25.4x | 1.42 | 22% | 36.1% | 9.2% | 42% | Cloud +63%; $462B backlog; 500K Waymo rides/wk; "compute constrained" |
| 5 | AMZN | $256 | 25.8x | 1.43 | 17% | 13.1% | −10.0% | 24% | AWS +28%; $364B backlog; Trainium $225B commits; $50B chip biz |
| 6 | AAPL | $332 | 34.0x | 2.54 | 17% | 32.3% | 24.0% | 2% | Cook→Ternus Sept 1; iPhone 17 most popular ever; memory costs "significantly higher" |
| 7 | TSLA | $394 | 154.4x | 4.96 | 16% | 4.2% | 6.5% | 15% | S/X ending; CyberCab April; Optimus 1M/yr target; "universal high income" |
Valuation: Three Are Cheap, One Is Extreme
The Big Tension: FCF vs Capex
The capex cycle is consuming free cash flow. NVDA is the only name where FCF dwarfs capex. AAPL is barely spending. Everyone else is in a capex sprint.
GOOGL spending 42% of revenue on capex with only 9.2% FCF margin is the most stressed. MSFT at 37% capex/rev is close behind. NVDA at 5% capex/rev is a completely different business — it collects the capex, it doesn't spend it.
Quality: Rule of 40
Smart Money: LEAPS Conviction
Gamma: Who Breaks First?
The Full Heatmap
| Fwd P/E | PEG | Grw% | OpMgn% | FCF% | Capex/Rev% | γ Buf% | |
|---|---|---|---|---|---|---|---|
| #1 NVDA | +16.6 | +0.7 | +85.2 | +65.6 | +59.5 | +5.0 | +4.6 |
| #2 META | +18.8 | +1.0 | +33.1 | +40.6 | +23.5 | +28.4 | +12.2 |
| #3 MSFT | +20.4 | +1.2 | +18.3 | +46.3 | +19.1 | +37.2 | +8.2 |
| #4 GOOGL | +25.4 | +1.4 | +21.8 | +36.1 | +9.2 | +42.0 | +5.7 |
| #5 AMZN | +25.8 | +1.4 | +16.6 | +13.1 | -10.0 | +24.0 | +9.2 |
| #6 AAPL | +34.0 | +2.5 | +16.6 | +32.3 | +24.0 | +1.8 | +14.1 |
| #7 TSLA | +154 | +5.0 | +15.8 | +4.2 | +6.5 | +15.0 | +1.6 |
Green = good, red = bad. NVDA's row is a wall of green. TSLA and AMZN are the reddest.
#1 NVDA — The Capex Collector
NVDA is the only Mag 7 name that benefits from everyone else's spending. 85% revenue growth. 65.6% operating margins. 59.5% FCF margin. $49B in free cash flow last quarter. At 16.6x forward with a 0.65 PEG, it's the cheapest stock in the group on every metric.
Jensen Huang on the Q1 call: "Our record-setting results reflect the accelerating demand for AI infrastructure." The Vera CPU and Rubin GPU systems are already in the pipeline. $82B revenue, above the $79.2B forecast. The memory bottleneck is real — NVIDIA flagged it directly — but "shortages in compute, networking, or memory can be mitigated by optimizing the other two."
$300 LEAPS calls (93K OI) and $400 calls (51K OI) are the two largest single-stock conviction bets in the entire Mag 7 universe. The gamma vise at $205–$210 is tight, but when it breaks, the LEAPS market says it breaks up.
#2 META — Cheapest AI-Adjacent Multiple, Most Bullish Options Desk
Mark Zuckerberg on the Q1 call: revenue $56.3B, up 33%. Ad impressions +19%, average price per ad +12%. AI-driven ad targeting is working. 8M+ advertisers using GenAI creative tools. Value optimization suite at $20B+ run rate.
The JPMorgan downgrade in April (Overweight → Neutral, $825 → $725) is the anchor on this stock. JPM cited "limited visibility into AI product monetization." But the same quarter showed ads +33% YoY. The capex is paying for itself right now — the agent-revenue story is the upside, not the base case.
Susan Li, CFO: DAP at 3.5B. Capex in Q1 was $16.1B — 28% of revenue. The Louisiana data center alone could eventually cost $250B when fully loaded with chips. Morgan Stanley sees META capex reaching $145B in 2026 and $175B in 2027.
The options desk is the most bullish in the Mag 7: OI P/C 0.44, LEAPS P/C 0.49, +15K net OI added. $1,000 and $1,500 call towers dominate.
#3 MSFT — The Enterprise AI Toll Road
Satya Nadella on the Q3 call: Microsoft Cloud exceeded $54B, up 29%. AI business surpassed $37B ARR, up 123%. 20M+ Microsoft 365 Copilot paid seats. Accenture at 740K seats — the largest Copilot win ever.
But capex is consuming the P&L. $30.9B in Q3 capex — 37% of revenue. FCF margin compressed from 33% to 19% in two quarters. Amy Hood, CFO: "We continue to invest in AI infrastructure, which positions us well for future growth." Maia 200 AI accelerator is live in Iowa and Arizona. Cobalt CPU deployed in nearly half of DC regions.
The $400 ATM put cluster (4.2K contracts) is the only yellow flag — someone hedging at the money. The $560 consensus target implies +42% upside. 8.2% gamma cushion.
#4 GOOGL — The Compute-Constrained Juggernaut
Sundar Pichai dropped a remarkable admission: "We are compute constrained in the near term. Our cloud revenue would have been higher if we were able to meet the demand."
The numbers back it up: Cloud revenue $20B, up 63%. Backlog nearly doubled to $462B. GenAI model revenue grew nearly 800% YoY. Waymo doing 500K autonomous rides/week across 11 cities. Gemini Enterprise paid users +40% QoQ.
But Anat Ashkenazi, CFO, warned: "The significant increase in our investment in technical infrastructure will continue to put pressure on the P&L in the form of higher depreciation expense and related data center operations costs such as energy." Capex guidance raised to $180-190B for 2026. Morgan Stanley sees $350B in 2027.
The LEAPS book is the cleanest in the Mag 7: P/C 0.48. $650 call tower (22K) dominates. FCF margin at 9.2% is the cost of the buildout. Goldman Sachs sees Mag 7 underperforming the equal-weight S&P 500 in 2026 due to diverging AI strategies — GOOGL's strategy is the most aggressive.
#5 AMZN — Capex Gamble with a $50B Chip Business
Andy Jassy's Q1: AWS $37.6B, up 28%. $150B annualized run rate. AI revenue $15B+ in its first 3 years vs. AWS's $58M in its first 3 years. Backlog $364B before the $100B+ Anthropic deal.
The hidden story: Amazon's custom silicon business is now a $50B annualized run rate if sold externally — one of the top three data center chip businesses in the world. Trainium has $225B+ in revenue commitments. Trainium2 is ~30% better price/performance than comparable GPUs. Trainium3, shipping now, is nearly fully subscribed. Trainium4, 18 months away, is already mostly reserved.
But Jassy warned: "The cost of components, particularly memory, has skyrocketed." FCF was negative $18.2B. Capex guidance $200B for 2026. Operating margin hit a company record 13.1%.
#6 AAPL — The Succession Premium
Tim Cook's last call as CEO: revenue $111.2B, up 17%. iPhone 17 "most popular lineup in history." Services $31B, all-time record. $100B new buyback. John Ternus takes over September 1.
But Cook warned: "Significantly higher memory costs" will impact gross margins, and the effect "will likely increase beyond June." Mac supply constraints persist for "several months." R&D growing "much higher than the company overall."
At 34x forward — already above the $317 consensus PT — AAPL needs the iPhone 18 cycle to land. Keybanc downgraded to Underweight at $250. Citi raised to $365. The Street is split. The gamma cushion at 14.1% is the safest in the Mag 7.
#7 TSLA — The Abundance Stock
Elon Musk: "We updated Tesla's mission to amazing abundance... I think we are headed to a future of universal high income." Model S/X ending. CyberCab production starts April. Optimus factory targeting 1M units/year in Fremont. FSD 1.1M paid customers. Robotaxi doing paid rides with no safety driver in Austin.
But: 154.4x forward. 4.2% operating margins. $20B+ capex coming. Energy margins facing compression. The $600 call/put mirror (12.8K calls vs 10.2K puts) is a volatility play, not conviction. Gamma flip at $387.83 — 1.6% below spot. A single bad session from dealers flipping short.
Tom Lee at Fundstrat: "The market is trying to understand the new narrative around the Mag 7 because they went from asset-light companies that produced a lot of free cash flow, now to ones that are more balance sheet intensive." His take: that balance sheet IS the moat — it's replacing human endeavors with AI.
The Bottom Line
Five of seven below 26x forward. NVDA and META have PEGs under 1.0. The capex overhang is the reason. Q2 earnings in late July are the catalyst — if cloud revenue accelerates and capex guidance doesn't blow out further, the Mag 7 reprice higher. If a hyperscaler guides capex down? David Rosenberg's Cisco moment arrives.
NVDA is the purest play: it collects the spending, doesn't do it. META is the cheapest AI-adjacent multiple with the market already pricing the JPM downgrade. GOOGL has the most underpriced optionality (Waymo, Cloud, TPU) but the most stressed FCF. MSFT is the safest compounder. AMZN's chip business is a hidden $50B company. AAPL needs iPhone 18. TSLA is a narrative stock — own it if you believe the robot future, not if you're looking at the P&L.