Matt Frankel, CFP®, The Motley Fool Fri, November 6, 2026 at 10:41 AM EST 5 min read ^GSPC +0.84% ^IXIC +1.55% NVDA +3.97% Trade NVIDIA on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Many investors don't believe the terms "Magnificent Seven" and "bargain stocks" usually belong in the same sentence. And it's easy to see why. Over the past five years, the Magnificent Seven has gained more than 180% as a group, more than double the S&P 500's total return over the same period. But I wouldn't be so sure, especially after the recent AI-related sell-off in stocks, which pushed the Nasdaq Composite nearly 12% below its record and into correction territory. Now, there are several potential bargains in the elite group.
Here's how the Magnificent Seven looks after the drop:
Missed AI's "Act 1"? Act 2 Could Be 16x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we're only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
Data source: yCharts. As of about 9:50 am ET on 11/6/2026.
Nvidia and Meta are trading at historically attractive valuations for sure. But I think Alphabet is the most attractive bargain of the group, and here's why.
Alphabet's third-quarter revenue grew 25% to $127.6 billion. The standout was Google Cloud, where revenue more than doubled, up 103% to $30.7 billion, and operating income tripled to $11.1 billion. CEO Sundar Pichai also said the Gemini app has reached 1 billion users.
Profitability held up, too. Operating income grew 30% to $40.6 billion, a margin of about 32%, even as Alphabet ramped up its AI spending. And Google Cloud's backlog of contracted future revenue reportedly stands at about $561 billion, which gives the segment years of visibility.
So why is the stock down about 30% from its high? Part of it is the earnings miss. Alphabet's earnings per share fell to $2.12, below the nearly $3.00 analysts expected, and the stock fell almost 13% the next day. But most of the miss came from an $8.7 billion loss on its equity investments, which cut earnings by $0.55 per share and has nothing to do with how the business is running. There's also search revenue, which grew 12%, but the slowing rate is concerning to investors who worry that Alphabet's AI progress could ultimately hurt its core search advertising business.
Perhaps most significantly, Alphabet is spending heavily on its AI infrastructure. It expects capex of $200 billion this year and significantly more next year. And investors seem concerned about whether the company will achieve an acceptable ROI on its spending.
Nvidia trades at about 21 times forward earnings, a remarkably low multiple, given that it grew revenue by 106% in the most recent quarter. But nearly all of Nvidia's profits depend on companies continuing to spend heavily on AI data centers, and that's exactly what the market is worried about right now.
Alphabet is in a different position. It's one of the biggest buyers of AI infrastructure, but through Google Cloud, it's also one of the biggest sellers. It also has Search and YouTube generating enormous profits. If AI spending slows, Alphabet's spending falls, too. If it keeps accelerating, Google Cloud benefits. While an overall AI build-out slowdown could certainly hurt the company's numbers, that's a much more balanced risk profile.
Meta Platforms is also attractive at about 21 times forward earnings, and it's a great business. But nearly all of its revenue comes from advertising, and it doesn't have a cloud business selling AI capacity to others. Alphabet gets paid on both sides of the AI boom.
As mentioned, Alphabet's spending is enormous. Capital expenditures more than doubled to $51.4 billion last quarter, and free cash flow was negative $9.1 billion. Alphabet didn't buy back any stock in the third quarter, compared with $11.5 billion a year earlier, and it raised about $12.4 billion by selling new shares. There's no guarantee those investments will start generating ample free cash flow.
Having said all that, I own Alphabet, and I think the correction has made it even more attractive. You're getting one of the world's most dominant businesses, growing the top line at 25% with a cloud segment that just doubled, for about 18 times forward earnings. I'm more likely to add to my position than sell.
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Alphabet wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $353,560!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,115,850!*
Now, it's worth noting Stock Advisor's total average return is 852% — a market-crushing outperformance compared to 203% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of November 6, 2026.
Matt Frankel, CFP® has positions in Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool has a disclosure policy.
Nasdaq Stock Market Correction: Here's the Most Attractive Bargain in the "Magnificent Seven" was originally published by The Motley Fool
