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The Magnificent Seven stocks have not been so magnificent as of late. The Roundhill Magnificent Seven ETF (NYSEMKT:MAGS), which invests exclusively in those seven mega-caps dubbed magnificent, has underperformed the S&P 500 this year.
The exchange-traded fund, which invests in just seven stocks -- Nvidia (NASDAQ:NVDA), Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), Meta Platforms (NASDAQ:META), Alphabet (NASDAQ:GOOG), and Tesla (NASDAQ:TSLA) -- is up just 2.8% year to date (YTD) and 4% over the past 12 months.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
On one end of the spectrum, Apple stock has outperformed, up 28% YTD and 29% over the past year. Amazon and Microsoft have been solid, if not spectacular, with Amazon up 17% YTD and 8% over the past year and Microsoft up 10% YTD and 5% over the past 12 months. Meta (-3%), Alphabet (-9%), Nvidia (-10%), and Tesla (-16%) are all down YTD.
Another mega-cap, Berkshire Hathaway (NYSE:BRKB), is the 13th-largest company in the world. Its stock price is up 16% YTD and 18% over the past 12 months. Is Berkshire Hathaway stock the better buy right now?
Of course, while the Magnificent Seven stocks have struggled this year, they have been juggernauts over the past 10 years, leading the AI revolution. Their long-term returns reflect that, as the chart below shows.
Nvidia, for example, has averaged a 58% annualized return over the past 10 years, while Apple has averaged a 29% return. Only Meta has averaged less than a 20% return over the past decade, with an average annualized 10-year return of 18%.
The recent swoon by most of the Magnificent Seven stocks is due to a variety of factors, most of them specific to the individual companies. If there are overriding trends hurting most of these mega-caps, it is their generally high valuations and concerns about overspending on AI.
Some of the Magnificent Seven stocks are great buys right now, trading at significant discounts. Some of them are not great buys. But the perfect complement to any Magnificent Seven holdings you might have is Berkshire Hathaway.
Over the past 60 years, since Warren Buffett became CEO of a small textile manufacturing company back in 1965, Berkshire Hathaway stock has posted an average annual return of 20%.
That's the type of long-term performance and consistency that investors should covet in any stock, including Nvidia, Apple, Microsoft, Amazon, and other tech giants.
As a value stock, Berkshire is the perfect complement to Magnificent Seven stocks and AI leaders, as this year's divergent performance shows. The company is a conglomerate of some 70 different companies and a $335 billion stock portfolio.
Buffett's strategies, and those of his successor, Greg Abel, focus on companies and investments that are good value, well-managed, and financially sound, with strong competitive advantages. These qualities, in turn, make Berkshire Hathaway a sturdy, rock-solid investment over the long term, but especially in choppy and uncertain markets.
Technologies change, and the Magnificent Seven may look very different 20 years from now than they do today. But Berkshire Hathaway will likely still play that same role in your portfolio, adding balance and ballast during tough times, and great long-term performance.
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Dave Kovaleski has positions in Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool has a disclosure policy.
Forget the "Magnificent Seven." Berkshire Hathaway Could Be the Better Long-Term Bet. was originally published by The Motley Fool
