Aside from Nvidia, there is 1 more “Magnificent Seven” stock that stands above the rest. The reason why may surprise you.

It seems like everyone wants to talk about The Magnificent Seven. Here are seven of the biggest and most important stocks around: Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta platform (NASDAQ: META)and adze.

All, in their own way, were excellent stocks to own. However, in the last 20 months, two have separated from the pack. One is Nvidia; the other might come as a surprise.

How the Magnificent Seven have evolved since 2023

First, let’s cover how Magnificent Seven stocks have fared since the start of 2023. Given the absolute explosion in demand for artificial intelligence (AI) systems in recent years, it’s no surprise that Nvidia is the best-performing stock from Magnificent. Seven. However, it might be a surprise to see how far Meta Platforms are is, compared to the rest.

Putting Nvidia aside, the Meta dominated the rest of the Magnificent Seven. Over the past 20 months, Meta shares have risen 334%. That’s about 3 times more than Amazon Next best Mag 7 stock, with a gain of 113%.

So what drives this divergence between the Meta and the rest of the Magnificent Seven?

What does the Meta have that the rest lack?

To begin with, let’s cover what Meta does and how it makes money. The company operates social networks such as Facebook and Instagram. It sells ad space on those platforms to advertisers, generating about $150 billion per year in income.

This contrasts with most other companies in the Magnificent Seven. Applefor example, it is based on iPhone sales and, to a lesser extentincome from services. Microsoft is a technological conglomerate with a great cloud services businesses, a flagship software segment and a large gaming unit. Amazon operates the world’s largest cloud service provider along with a massive e-commerce segment. adze sell electric vehicles.

Only Alphabet it operates in the same orbit as Meta with its Google and YouTube search businesses. However, even with Alphabet, there are significant differences. Alphabet makes a lot of money from ad revenue, but this he does it by selling ads by searching for it functionality, rather than through a social media feed like Facebook or Instagram.

The big difference, however, comes when you look at a very important metric: free cash flow.

As you can see above, both Alphabet and Meta have expanded their free cash flow impressive the fashion of the last 10 years. Still, over the last one 18 months, Meta has really he separated. There are a few reasons for this.

First, the Meta is growing at a breakneck pace. In its most recent quarter (the three months ended June 30), Meta reported a 22% increase in revenue. That’s nearly double Alphabet’s pace, which has grown TO 13% in the same period.

The story continues

Second, Meta cuts some expensive projects. Spending on the company’s Reality Labs, the segment tasked with building the company’s version of the metaverse, will drop by about 20% this year.

Ultimately, revenue growth and cost reduction aside, Meta’s business is only extremely profitable. As shown below, it ranks third among Mag 7 businesses, behind Nvidia and Microsoft.

Is Meta Platforms still a buy now?

Of course, Meta Platforms is not a stock for every investment portfolio. While the stock now pays a dividend, the stock’s 0.4% dividend yield is hardly enough to satisfy value investors or those who need to generate significant amounts of income from their investments. Still, Meta is a great stock — especially for investors who can hold the stock for years and benefit from its growing sales and free cash flow. For these reasons, Meta is an excellent stock that most investors should consider.

Should You Invest $1,000 In Meta Platforms Right Now?

Before buying shares in Meta Platforms, consider the following:

The Motley Fool Stock Advisor the analyst team has just identified what they think they are 10 best stocks for investors to buy now… and Meta Platforms was not one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you would have $650,810!*

Stock advisor provides investors with an easy-to-follow blueprint for success, including portfolio construction guidance, regular updates from analysts, and two new stock picks every month. The Stock advisor the service has more than four times return of the S&P 500 since 2002*.

See the 10 stocks »

*The stock advisor returns as of September 3, 2024

Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a board member of The Motley Fool. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. Suzanne Frey, chief executive at Alphabet, is a member of the Motley Fool’s board of directors. Jake Lerch has positions in Alphabet, Amazon, Nvidia and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla. The Motley Fool recommends the following options: long $395 January 2026 Microsoft calls and short $405 January 2026 Microsoft calls. The Motley Fool has a disclosure policy.

Aside from Nvidia, there is 1 more “Magnificent Seven” stock that stands above the rest. The reason why may surprise you. was originally published by The Motley Fool