(Dec 3): The “Magnificent Seven” stocks are a “buy” during corrections, as most of them will keep generating money, according to a New York University (NYU) professor known for his expertise on valuations.

“As a value investor, I have never seen cash machines as lucrative as these companies are,” Aswath Damodaran, a finance professor at NYU’s Stern School of Business, said in a Bloomberg Television interview. “And I don’t see the cash machine slowing down.”

The stocks — Tesla Inc, Meta Platforms Inc, Microsoft Corp, Alphabet Inc, Amazon.com Inc, Apple Inc, and Nvidia Corp — are some of the biggest worldwide, have dominated the tech and artificial-intelligence (AI) boom, and been responsible for an outsized amount of US equity-index gain for years. A Bloomberg gauge of the seven has surged 60% so far this year, after doubling in 2023. 

There will be corrections and “I’d suggest that when that happens, you find a way to add at least one, maybe two- or three of these companies, because these are so much part of what drives the economy and the market,” he added.

The cohort’s gains have been helped recently by electric-vehicle (EV) maker Tesla, which was down for much of the year. It has rallied as investors bet that Donald Trump’s return to the White House will be a positive force for the company run by Elon Musk, who helped finance Trump’s campaign and is an adviser to the president-elect.

Damodaran said that the seven megacaps, including chip giant Nvidia, are “insanely profitable” and he owns all of them.

Uploaded by Liza Shireen Koshy