3 Stocks With the Most Potential to Upstage the Magnificent 7 in 2024

Stocks to buy

Not all Magnificent Seven stocks have been pulling their fair share of the weight this year. Undoubtedly, the artificial intelligence (AI) boom may still be in its early stages. And while each one of the Magnificent members seems well-positioned to capture the market opportunity, none are better equipped than Nvidia (NASDAQ:NVDA).

The GPU maker has been cashing in on the early days of the AI boom. At this pace, it’s hard to envision the other six members of the Magnificent Seven coming close to the type of numbers Nvidia has been posting.

While Nvidia’s lead seems to be widening by the week, it’s still unclear which stocks will be magnificent in the next quarter, let alone next year. AI innovation is moving so fast that acronyms, such as the Magnificent Seven, stand to be outdated rather quickly.

Jim Cramer’s famed FAANG acronym lasted for quite a while. But with the Magnificent Seven concentrated on just a handful of winners, questions linger as to whether a new acronym is needed to describe America’s best and brightest companies. I think it is. And if a new group were to be crafted, I’d put the following three stocks in that basket.

Arm Holdings (ARM)

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The recent jaw-dropping performance of Arm Holdings (NASDAQ:ARM) is what IPO investors dream of when they look to pick up their first few shares of a new issue. Undoubtedly, it’s quite rare to see such a profound IPO skyrocket in the year that follows. Too many new issues tend to land on the public markets at rather hot, even inflated prices, at the high end of the pricing range.

At writing, Arm stock is up around 160% from its $61.00 per share IPO price. The capital-light semiconductor play, which licenses out its chip designs, is potentially better positioned for the coming AI boom. More so than many early skeptics may have anticipated. Undoubtedly, there was likely a reason why Nvidia unsuccessfully chased down the firm a while back.

As generative AI falls from the cloud to our desktop and handheld devices, energy-efficient hardware to get models running will be key. At 83.3 times forward price-to-earnings (P/E) and around 45.9 times price-to-sales (P/S), shares appear undeniably expensive on the surface. However, when it comes to AI chip plays, what seems expensive today may not be so next year.

While nobody knows if Arm’s future holds Nvidia-esque surprises, I do view the firm as a top candidate for inclusion in whichever buzzy acronym succeeds the Magnificent Seven.

Salesforce (CRM)

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As profits spread from AI chips to the enterprise software scene, Salesforce (NYSE:CRM) stands out as a top beneficiary. If the company’s AI-savvy televised commercials featuring Matthew McConaughey don’t convince you, perhaps new value-adding AI services like Einstein Copilot will.

The company’s customer relationship management (CRM) platform is poised to get a steady flow of new AI innovations and features. Top boss Marc Benioff sees AI as a potential boon to Salesforce’s business. I do not doubt the man as he looks to evolve his firm for the AI age.

Further, look for the Slack factor to shine in the AI era. Salesforce’s Slack deal’s timing was certainly not perfect. However, with the AI bull market taking hold, I’m looking back on the acquisition as one of Benioff’s brightest moves.

Slack is at the absolute center of the enterprise — I don’t think there’s any denying that. Moving ahead, Slack will allow Salesforce to “floor it” with AI expansion as it equips customers with its own AI copilot.

Uber Technologies (UBER)

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Uber Technologies (NYSE:UBER) is one of the year’s hottest stocks, now up around 38% year to date. As impressive as the ride-hailing giant’s surge has been, I do see many ways the firm can extend its rally. It might just hit the $100 per share milestone.

As the company goes electric, subtly nudging users to choose electric vehicle (EVs), we’ll see Uber become an ESG-flavored play. Add its recently launched “Emissions Saving” data to the app, and it’s clear Uber is both the most convenient way to travel and one of the more eco-friendly options out there.

Aside from EVs, look for Uber to find other ways to improve customers’ experiences, beyond just ride-hailing or food-delivery. At the pace of margin improvement, the $166.6 billion transportation titan deserves a spot in the next big high-growth cohort.

On the date of publication, Joey Frenette held shares of Salesforce. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joey Frenette is a seasoned investment writer specializing in technology and consumer stocks. Contributing to the Motley Fool Canada, TipRanks, and Barchart, Joey excels in spotting mispriced stocks with long-term growth potential in a fast-paced market.

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