These 3 Stocks Won’t Be Magnificent Buys in 5 Years

The “Magnificent Seven” are a group of the world’s most popular and promising growth stocks. Investing in these big-name tech stocks has been a great way to earn some significant returns in recent years. But things can change quickly in the tech world, and just because some stocks have done well in recent years doesn’t mean that they will be solid stocks to hang on to in the long run.

Three Magnificent Seven stocks that I don’t think will look so magnificent in five years are Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), Meta Platforms (NASDAQ: META), and Tesla (NASDAQ: TSLA). Here’s why these particular stocks could struggle in the years ahead.

1. Alphabet

Alphabet used to be a stock I was bullish about. The business looked dominant with a top video streaming website (YouTube) and a top search engine (Google).

Nowadays, I’m not as optimistic. As the ads get longer and longer on YouTube, the risk is that it might give users an incentive to switch to a streaming service such as Netflix instead, where there’s a broad range of top content to choose from to help justify its price tag without annoying ads (depending on the subscription tier).

But the biggest risk for Alphabet undoubtedly comes in its search business. Regulators have already ruled that Google is a monopoly, and the consequences of that are still unknown, but they’ll likely hurt its growth prospects. And with more artificial intelligence (AI)-powered chatbots answering questions and reducing the need to go to Google, that’s another headwind for its sales growth.

The stock might look cheap, trading at just 23 times its trailing earnings, and its revenue is still strong, growing by 14% year over year in the latest reported quarter, but investors shouldn’t gloss over the long-term risks that Alphabet faces. There could be some daunting new challenges and competition that could stunt its growth and reduce its earnings power, which is why I would avoid the stock right now.