7 Up

Alphabet (Google), Amazon, Apple, Meta (Facebook), Microsoft, Nvidia, and Tesla – “The Magnificent 7,” as they’re now referred to – averaged an amazing 115% returns over the course of 2023 alone, and have achieved the following returns since we first recommended them in Motley Fool Stock Advisor (except for Microsoft, long before they'd grown into their magnificent moniker):

Apple, up +4,596% since 1/18/2008
Amazon, up +28,726% since 9/6/2002
Alphabet, up +1,175% since 7/20/2012
Tesla, up +19,395% since 11/16/2012
Meta, up +668% since 2/20/2015
Microsoft, up +2,390% since 12/21/2003
Nvidia, up +81,759 since 4/15/2005

These are amazing returns, and point out the extraordinary benefits of the long-term investing approach we teach at The Motley Fool.

BUT... this great run has caused the Mag 7 to grow from 9% of the S&P 500 at the end of 2013 to 30% at the end of 2023! That means even if you don't own any of these seven stocks directly, you're still very exposed to them if you have an index fund or ETF that tracks the market.

This is the problem

And this is exactly what worries many experts. For instance, Ark Investment Management’s Cathie Wood has been steadily selling off her Nvidia position, calling it “really expensive and very obvious.” Warren Buffett's Berkshire Hathaway recently trimmed its massive position in Apple.

Even Mike O’Rourke, the analyst who actually coined the "Magnificent 7" phrase, sees their fortunes diverging in the coming years, with some of the seven simply underperforming in the future.

The problem is when stocks get THIS BIG in relation to the rest of the market, you simply reach diminishing returns. For Apple alone to replicate its past success, its market cap would grow to larger than the entire U.S. GDP!

In short: While some of these huge companies may still deliver solid future returns, it's unlikely they'll ever approach their past success again.

And that affects a huge number of investors who may be targeting more massive returns.

The next mag 7?

Our team knows that many investors are, indeed, still after those life-changing returns. And so we've been looking for companies that have a chance at these types of explosive, long-term gains... yes, the next Magnificent 7, if you will.

If we consider that each of the original Mag 7:

Tapped into a MASSIVE, fast-growing market opportunity, and then
Went on to absolutely dominate that market...

Then:

It makes sense to concentrate on the next sectors that could be just as impactful and just as large – if not larger, as I’ll share in just a second.
Then identify stocks of infinitely smaller companies with the early look of becoming the next potential superpower stocks…
…That are potentially primed to control the sectors of the global economy that, to date, have yet to be fully realized – meaning they’ve also yet to be dominated.

One stock, two hot industries

And so the same team that produced the great returns I mentioned above set out to do just that.

Their research is amazing, and deep, and is being shared only with their members. However, here's just a couple of highlights that I can share with you:

One emerging industry they've identified is cybersecurity, a projected $2 trillion opportunity.
Another (and far more obvious one) is artificial intelligence – a projected $15.7 trillion opportunity.
Both of these industries still have vast opportunities and no dominant players.

And that's the reason for my article today. Our Motley Fool Stock Advisor analysts are recommending one company that's making big inroads in both cybersecurity and AI.

We believe this makes the business especially well positioned in two of the most promising tech trends of the future.

This company has:

Built up its cybersecurity platform quickly and has a long growth runway ahead of it.
Seen its revenue and operating cash flow soar in recent years
Over 40% of Fortune 500 companies and 30% of Global 2000 companies as clients

As I mentioned, artificial intelligence is already a key component of its overall strategy. It should benefit from the fact that enterprise customers are concerned about the potential security threats that AI adoption brings with it.

We like the company so much The Motley Fool has $940,642.23 of our own money invested in the stock (as of 9/04/2024).

We've put this company's name, ticker symbol, and all the details of why we're excited about its potential into a new, special report. Also included in the report is a complete breakdown of the AI industry, and five more stocks we think could be great for playing the AI boom.

The best part is that we’re giving this new report -- “One Candidate for the Next Magnificent 7” -- for free to new members of Stock Advisor.

Over the past 20 years, Stock Advisor has picked stocks that have helped investors...

At least DOUBLE their money on 148 occasions…
More than TRIPLE their money on 111 occasions…
And even 10x their wealth on 39 occasions…

And today, you can become a member of Stock Advisor for 62% off two years PLUS grab your copy of One Candidate for the Next Magnificent 7 for free.

Click below to join Stock Advisor and get your free report today.