Down Nearly 20%, This AI Giant Is the Best Bargain "Magnificent Seven" Stock Right Now

Stocks known as the "Magnificent Seven" led market gains last year as investors bet on a potential artificial intelligence (AI) revolution. This group of top tech stocks has been investing heavily in AI, and each member is well positioned to benefit from the AI growth story. I'm talking about Apple, Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia (NASDAQ: NVDA), and Tesla. But in recent times, these once sought-after stocks have been much less popular with investors.

As President Trump announced plans to tax imports, investors worried the tariffs, resulting in higher costs, could hurt both the U.S. consumer and U.S. companies. The S&P 500 index fell as much as 15% from the start of the year through its lowest point last month. Stocks across industries have suffered, but companies that rely heavily on production abroad took the biggest hit. And tech stocks are at the top of the list. Though Trump temporarily exempted electronics from tariffs, investors worry that an eventual duty -- regardless of the level -- will represent a headwind.

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And that's weighed on shares of one of last year's biggest AI winners. This company has seen its stock drop nearly 20% since the start of the year -- and valuation has followed. It's not the very cheapest of the Magnificent Seven, but it actually represents the best bargain right now. Let's find out why.

Image source: Getty Images.

The biggest AI winner

You may be surprised when I tell you that this stock is the once high-flying Nvidia. It's hard to imagine the stock as a bargain after its 800% gain over the past two years. Why has Nvidia climbed? The company quickly emerged as the biggest potential winner of the AI race, and this is thanks to its leading portfolio of AI products and services.

Nvidia makes the world's most powerful AI chips, known as graphics processing units (GPUs). These GPUs power crucial AI tasks -- and a high-performance GPU can make a huge difference in the outcome of a customer's AI projects. That's why some fellow Magnificent Seven companies -- as well as other tech giants -- are major Nvidia customers.

Nvidia hasn't stopped at GPUs, though, and instead has built an entire ecosystem of products and services designed specifically for the AI customer. And the company has even created special platforms for various industries, such as healthcare or automotive. All of this has helped Nvidia's revenue to explode higher in recent years, reaching a record $130 billion in the latest full year.

In recent times, though, concern about eventual tariffs on imports as well as government decisions that have barred Nvidia from exporting its chips to China have hurt demand for the stock. That's because these elements could impact the company's revenue to some degree. As a result, Nvidia stock slipped, leaving the stock trading for 24x forward earnings estimates. This isn't the cheapest of the Magnificent Seven, but it still remains an extremely reasonable price.

NVDA PE Ratio (Forward) data by YCharts

Sustainable growth rates

Now, let's consider the element that makes the stock a bargain right now, and that could be seen in the chart below. This shows the trailing 12-month sustainable growth rate of Nvidia compared to other Magnificent Seven players. This metric represents the growth rate expected over time if the company's financial policies don't significantly change.

NVDA Sustainable Growth Rate (TTM) data by YCharts

As we can see, Nvidia's is the highest of the bunch. Though Apple is quite close, it's important to note that Apple's sustainable growth rate has been slightly on the decline while Nvidia's has been on the rise.

This, combined with Nvidia's current valuation, make the stock look particularly cheap at the moment. Of course, you might say that we don't yet know the level of import tariffs on electronics and if tariffs are higher than expected this could weigh on growth. This is true. But this problem will impact the other Magnificent Seven companies too, hurting their growth prospects -- so they, too, could see lower earnings potential due to this headwind. That means Nvidia still could represent the best deal of the group.

Two more reasons to be optimistic

Beyond that, though, two other elements make me optimistic about Nvidia. One is that the company is very proactive, recently announcing a major investment in U.S. manufacturing -- this could lower its exposure to import tariffs. And second, Nvidia is known for its focus on innovation, with a pledge to update its GPUs on an annual basis. This should keep the company ahead of rivals, spurring significant growth in revenue as the AI boom continues.

Nvidia's market leadership and efforts to limit negative tariff impact are positive -- and are reasons to believe the company can maintain a high rate of growth. And this along with the stock's current valuation makes Nvidia the best Magnificent Seven bargain buy right now.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adria Cimino has positions in Amazon 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 January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.