The Magnificent 7 and the “Industrial Revolution” of AI

The high-tech sector has been more hyperactive than usual, as evidenced by recent data. Amazon surpassed $2 trillion in market capitalization for the first time, joining the exclusive club of US companies capable of this performance - previously achieved only by Apple, Microsoft, Alphabet, and Nvidia. Nvidia itself, with its annual shareholders meeting on June 26, experienced stock market roller coasters, historically surpassing Apple and Microsoft, followed by recent corrections.

In the interview with Class CNBC's "Mercati al giro di Boa", Mashfrog CEO Edoardo Narduzzi reviewed the stock market performances of the Magnificent 7: Meta, Alphabet, Apple, Tesla, Microsoft, Amazon, and Nvidia.

Nvidia, led by CEO Jensen Huang, “has a huge competitive advantage in chip production in the medium to long term,” explained Narduzzi, “because it enhances all Big Corp investments in AI and will enable AI to reach end consumers through smartphones, gaming consoles, and PCs.”

Despite the recent volatility, “the likelihood that Nvidia will surpass Apple and Microsoft as the most valuable tech company in the world by 2025 is very high,” stated Narduzzi. Its success is unique and should be closely monitored, not only for its evident role in AI development but also for the type of company and production sector it operates in.

“Nvidia is a manufacturing company - and manufacturing is very complicated - that stands out from Apple and Microsoft, marking the return of manufacturing supremacy. It has created a production process that generates an EBITDA margin of around 80%, which is unprecedented for a manufacturing company,” Narduzzi said. “I believe Nvidia already uses AI to redesign and manage its production processes. It is a margin champion, and this will drive its performance in the upcoming quarters in 2025.”

The prominence and centrality of the Santa Clara company, which in the words of its CEO has announced a “new industrial revolution,” may overshadow the other Magnificent Seven. According to Narduzzi, this is a new era to be discovered, where other big players will play their part. “Ahead of the quarterly reports, Alphabet and Apple are the two most interesting stocks to watch because they have the potential to leverage their data assets and market positioning, which is partly reflected in their stock prices but largely remains unrealized in their market value.”

Apple, in particular, is worth watching. “Before Nvidia, it was the most efficient company in the world in terms of EBITDA margin; it has a number of loyal consumers with unique consumption potential on the planet,” Narduzzi emphasized. “It faces various challenges because it cannot operate freely in the largest Asian market, China, due to geopolitical reasons and strong local competition. It also has more difficulty in the B2C sector to immediately exploit AI advantages. But investing in Apple is worthwhile because, alongside Alphabet, it will be a protagonist in the AI industrial revolution.”