Here Are My Top 2 "Magnificent Seven" Stocks to Buy for 2026

Core Viewpoint - Apple and Amazon, despite underperforming in 2025, are positioned to outperform the market in 2026 and beyond, driven by strong fundamentals and growth potential in their respective sectors [1][2]. Group 1: Apple - Apple's fiscal 2025 closed with a fourth-quarter revenue increase of 8% year-over-year and double-digit earnings growth, bolstered by record services performance [1]. - Services revenue for Apple rose 15% to $28.8 billion, contributing to a 13% year-over-year increase in earnings per share, with a gross profit margin exceeding 75% [3][4]. - The total count of active devices reached an all-time high of 2.35 billion, providing a solid foundation for new services and AI features [4]. - Management anticipates total revenue growth of 10% to 12% year-over-year in the holiday quarter, with iPhone revenue expected to return to double-digit growth [6]. - Apple stock trades at approximately 37 times earnings, reflecting a premium valuation justified by its service momentum and loyal customer base [7]. Group 2: Amazon - Amazon reported a 13% revenue growth in Q3 2025, with AWS reaccelerating to 20.2% year-over-year growth, driven by strong AI demand [1][8]. - The operating income for Amazon held steady at $17.4 billion, despite absorbing significant costs, indicating strong leverage from its fulfillment network and cloud operations [10]. - AI is becoming a major growth catalyst for Amazon, enhancing performance across various business segments [11]. - Amazon's stock trades at about 32 times earnings, presenting an attractive valuation relative to its double-digit revenue growth and reaccelerating cloud business [12]. Group 3: Investment Outlook - Together, Apple and Amazon provide investors with complementary exposure to the tech sector, with Apple focusing on high-margin services and a loyal customer base, while Amazon offers diversified business exposure and AI infrastructure [13]. - Both companies are seen as solid investment options for forward-looking investors seeking concentrated exposure to dominant U.S. tech franchises [14].