So far in 2024 shares of Tesla (NASDAQ:TSLA) and Apple (NASDAQ:AAPL) haven’t done well at all, falling 28% and 11.5%, respectively. As a result, it appears that they aren’t so “magnificent” and their spots in the Magnificent 7 should probably be taken by other tech stocks.
Therefore, in this column I will take the initiative by selecting their replacements. Among the criteria I have used in choosing replacements are the strength of firms’ businesses, the extent to which they have positive outlooks and the performance of their stocks over the last year. I’ll also add an extra nominee in case another one of the Magnificent 7 tech stocks start stumbling soon.
Super Micro Computer (SMCI)
Super Micro Computer (NASDAQ:SMCI) is benefiting tremendously from selling servers and other hardware that work in tandem with chips that produce artificial intelligence. Last quarter, for example, its top line more than doubled versus the same period a year earlier, while its bottom line climbed to $296 million from $176 million during the identical quarter in 2022.
Given the continued, rapid proliferation of AI and data centers’ affinity for SMCI’s products, the firm has a very bright future. Supporting this, investment bank Argus wrote that SMCI is primed for multiple years of strong top-line growth and margin expansion. The bank even compared the stock to Apple, Amazon (NASDAQ:AMZN), and Nvidia (NASDAQ:NVDA) in their earlier days.
SMCI stock had jumped an incredible 299% in the last three months and 1,028% over the last year.
ServiceNow (NOW)
ServiceNow (NASDAQ:NOW) provides software that automates IT tasks, and the company launched a very successful AI-powered app in Q3 of 2023.
The company’s CEO, Bill McDermott, indicated in January that NOW had been able to charge extraordinarily high prices for its AI app. He also suggested that the firm’s AI app raises companies’ productivity levels by 40%-50%. Going forward, NOW should continue to benefit from companies’ strong demand for high-quality AI apps.
Last quarter, NOW’s top line jumped 26% versus the same period a year earlier, and it expects its income from operations to soar 29% during the current quarter. Then last month, investment bank Argus hiked its price target on NOW stock to $910 from $770. The bank expects the company to benefit from continued upgrades to its AI app.
The shares have advanced 10% in the last three months and 82% over the last 12 months.
MercadoLibre (MELI)
MercadoLibre (NASDAQ:MELI) is a South American e-commerce and fintech powerhouse.
The firm has an impressive user base of 218 million, while its EPS more than doubled last year. According to Barron’s, EPS is expected to climb 80% in 2024.
Investment bank BTIG recommends buying MELI stock on weakness after the company reported that its gross margins fell last quarter, while its bottom line came in below analysts’ average estimate due to a tax payment.
Also impressed with the firm’s Q4 results was one of its investors, Lakehouse Global Growth Fund. In a letter to its clients, the fund wrote that MELI had delivered an impressive balance of growth and profitability.
On the date of publication, Larry Ramer held long positions in SMCI and AMZN and his wife held a long position in NOW. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.