Buy ‘magnificent seven’ on corrections, says NYU’s Damodaran

The “Magnificent Seven” stocks are a buy during corrections as most of them will keep generating money, according to a New York University 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 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.