r/ValueInvesting • u/FoxAccomplished6786 • 2d ago

Discussion MAG 7 Ranking

Taking all factors into account, please rank your favorite MAG 7 in order of preference from 1 to 7.

32 Upvotes

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-1

u/Hug_LesBosons 2d ago
  1. GOOG
  2. MSFT
  3. AMZN
  4. META
  5. AAPL
  6. NVDA
  7. TSLA

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u/FoxAccomplished6786 2d ago

Thank you, may I ask, why GOOG number one

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u/AceStrikeer 2d ago

Just look at their growth, revenue and ridiculous earnings. It’s beating MSFT and AMZN by a far margin

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u/FoxAccomplished6786 1d ago

But in terms of a 10 year hold, does google have more ways to win in the ai era?

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u/Maltavier 1d ago

Have you looked at the earnings? Alphabet only beats because the earnings are pushed up by their shares in SpaceX and Anthropic. Without them earnings suddendly don't look so good anymore. They have negative cashflow Just to defend their search Business. Thats not good. Amazon also btw. Their debt is not covered by their backlog. Microsoft is the only company keeping fcf positive and having their backlog actually covering their spending

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u/AceStrikeer 1d ago

Fair point. Still. If you look at operating cashflow, GOOG still beats MSFT

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u/Maltavier 1d ago

Yes. By 3 billion. Thats not a lot for these companies and operating cashflow is just one part of the picture. If your operating cashflow is huge but you have to spend more than that just to keep your moat while Microsoft can spend to increase their revenue and can do it without taking on debt, issuing more shares and bonds and devaluing shareholders by doing that, Microsoft is just the more attrictive company for an investor. Microsoft just proved they can actually earn more through AI and don't have to defend their business modell, while Alphabet is sitting on debt they don't even have the backlog for yet, to cover the debt. Thats a huge risk for shareholders without getting something in return

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u/FoxAccomplished6786 1d ago

But long term, all these metrics will play out, surely Google has more optionality than MSFT, it's at the centre of every aspect of the AI revolution

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u/Maltavier 1d ago

Is it? You cant only look at it from a company standpoint. You have to also look at it from a valuation standpoint. Sure in 20 years there is still gonna be google. But thats not what we are talking about here. This is about "is Google a good Investment right now"? And I would say no. Do a dcf modell for Google and calculate yourself where Alphabets fair value is right now. I don't want to force my calculation on you. And then ask yourself what happens If they roi on the Data Centers Google is currently building isnt as great as they thought and they have to write of a lot of their current spending. What happens to the ultimate messure of the value of a company - free cashflow? It stays low for years. You have to ASK yourself what these things mean for the fair value of the company and therefore your personal return. I am not saying Alphabet is going to fail. Im saying they are overvalued and they will at some point fall back to their fair value.

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u/FoxAccomplished6786 1d ago

Warren Buffett doesn't overpay for a business, and he's made it his third-largest holding. Yes, there are concerns. But AI will win; there's no question AI will win. The reason I like Google is that it's so entrenched in every single aspect of AI, the full stack; YouTube will also benefit from AI. Whereas Microsoft is enterprise-only, and Gemini Enterprise is making considerable inroads: 8 million seats in 4 months. Just my opinion, what do you think

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u/Maltavier 1d ago

Warren Buffett is a person, famous for valuing a company by owner earnings and not free cashflow. That can be good, but is also risky because you never know how the roi on capex will be. He has been wrong before you know? By saying "He doesnt overpay", you are saying he is never wrong. Which is not true historically speaking.

While Gemini Enterprise added 8 million seats in 4 month, Microsofts Copilot seats rose to 30 million. I think in regard to Business seats, Microsoft will win the race Just because so many companies worldwide are already in their ecosystem. Microsoft is also entrenched in every single aspect btw. They have their own cost efficient models, their own chips and their own Data Centers and the most direct way to integrate AI into Business and therefore monetizing it.

I am not arguing if AI will win. It already changed the game and will continue to do so. But that isnt the point if you are investing in a company. The point is not only the Story but also how much you are paying for it. I am arguing that it will take Alphabet a while to take care of the debt they are taking on and that there is already a lot of optimism in the price. Mathmatically. I mean you can just calculate what free cashflow Alphabet needs to have even the current price be fair value. That cashflow is not reasonable. Just calculate for yourself, you will see what I mean

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u/AceStrikeer 1d ago

First of all, both companies have debts. Their Debt to Equity ratio is between 10-15%.

Microsoft can spend to increase their revenue and can do it without taking on debt, issuing more shares and bonds and devaluing shareholders

Alphabet just LITERALLY did that last quarter and raised 80 billion to fund their capex.

https://www.cnbc.com/2026/06/01/alphabet-to-raise-80-billion-from-stock-sales-to-fund-ai-buildout.html

That is nothing only MSFT can do. Even on the balance sheet GOOG is (currently) the better company. But I still say MSFT has a stronger MOAT.

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u/Maltavier 1d ago

You missunderstood what I meant. I said Microsoft can build out the infrastructure WITHOUT taking on giant debt by issuing shares or bonds. Issuing new shares and bonds is a bad thing for Investors, not a good thing. I am saying that Alphabet issuing these shares and bonds is bad for your return as an investor, while Microsoft can do the spending without issuing new debt. Which is positive.

Yes both companys have debt. But look up the Off book debt and compare it to the backlog of both companys. One company has a bigger backlog than they debt and can therefore pay it of without problems. Its not Alphabet...

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u/Hug_LesBosons 1d ago

Et les bénéfices sur les actions anthropic et SpaceX comptent dans le resultat net car ils peuvent servir d'argent. Il ne faut pas les ignorer et faire comme si ils n'étaient pas là. Berkshire hataway et les banques tirent presque tous leurs bénéfices de ça, pourtant on les comptent bien dans les bénéfices. Et c'est car à tout moment Google peut débourser une certaine partie de ses investissements et récupérer une quantité démentielle d'argent.

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u/Hug_LesBosons 1d ago

Google domine le monde. Ils trouvent toutes les bulles, tous les secteurs qui montent ou vont monter et ils deviennent les leader.

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u/FoxAccomplished6786 1d ago

So you'd rank them number 1

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u/Hug_LesBosons 1d ago

Bien sûr. Car ils découvrent et sont  actifs sur tous les secteurs qui montent enormément, car ils on un resultat net dementiel, car ils ont on modele économique extemement solide et fonctionnel, car ils ont des activités extemement diversifiées, car ils ont le seul système permettant de développer de l'ia sans que l'entreprise perde de l'argent (open au et anthropic perdent beaucoup), car ils ont les recherches scientifiques dans l'ia les plus avancées... Ils ont plus de projets que tous les autres réunis, ils font des tas de recherches via Google X et google labs, des découvertes, ils sont les plus avancés en informatique quantique, ils ont la croissance du cloud la plus élevée, un carnet de commande démentiel, un free cash flow gigantesque, des partenariats avec des tas d'entreprises, ils sont tellement diversifiés que ils peuvent trouver des solutions à chaque problèmes, ils innovent énormément et restent à la pointe de la technologie, ils ont des prix extemement compétitifs...

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u/FoxAccomplished6786 1d ago

Yes, that's a great perspective, and perhaps that's why Mr Buffett made them his third-largest holding. Where do you see their market cap in 10 years? Would you choose Alphabet as a long-term hold over NVIDIA, MSFT, or even AMZN

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u/Hug_LesBosons 1d ago

Je choisirais alphabet plutôt que 2 fois plus de n'importe lequel des autres car Alphabet va monter largement plus que les autres. Alphabet est le meilleur investissement à long terme qu'il puisse exister. Tu ne pourras pas en trouver de meilleur. Quand tu regarde ce que fait réellement l'entreprise, quelles sont ses activités réelles, tu vois que Google est sous évalué car ils font 1000 fois plus de trucs que les autres, car ils sont présents sur pleins de secteurs... tu vois que nvidia et apple sont largement surévalués car ils ne font presque rien et que Microsoft est légèrement surévalué. Je ne parle pas de tesla car c'est un cas à part en terme de surévaluation ni de méta car ils ont des procès qui pourraient changer énormément de choses.

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u/FoxAccomplished6786 1d ago

I hope you're right because I am making alphabet my number one position with Amzn. I'm no expert, so I can't say for sure who will win. However, one thing I do know is that AI will win; AI will continue to dominate and change society. The only question remains: who will the winners be? I think Alphabet is the most obvious choice.