The Magnificent Seven’s best days are not behind them, Jim Cramer says

CNBC’s Jim Cramer on Monday told investors why he thinks the Magnificent Seven — tech megacaps Apple, Amazon, Alphabet, Nvidia, Meta, Microsoft and Tesla — can continue to succeed even as they’ve seen immense gains over the past few years.

“The Magnificent Seven are heroes, and I’m not going to tell you to sell heroes, unless something changes that makes them feel a lot less heroic. That hasn’t happened, though,” he said. “They’ve still got great management, they’re still overflowing with cash, and their scale is so enormous that no one can stand against them. What’s not to like?”

According to Cramer, some on Wall Street believe these companies’ best days are in the past, and that they’ve missed the stocks’ biggest moves. But this sentiment has been around for years, Cramer suggested, even as the companies have continued to grow. As long as management hasn’t changed — or if there’s been a smooth transition — Cramer said the Magnificent Seven still have “incredibly compelling valuations.”

Cramer listed off reasons he believes these companies can maintain their success, including strong balance sheets and scale. The enormous amounts of money the Magnificent Seven have at their disposal means they wield power over competitors and can successfully push back against government interference, he said. The tech giants’ scale also means they have a huge capacity to expand, which makes them hard to take on, he said.

The Magnificent Seven are also skilled innovators, Cramer continued. For example, he pointed to the way Meta managed to reinvent itself by buying WhatsApp and Instagram. He also mentioned that the Food and Drug Administration just cleared Apple’s Apple Watch to measure hypertension. To Cramer, “something good always seems to be in the works,” when it comes to the Magnificent Seven. He noted that Tesla CEO Elon musk just repurchased $1 billion worth of stock, a significant buyback that some investors feel is a sign of confidence for the company.

Cramer acknowledged that these stocks do have their setbacks, mentioning Wall Street’s fear that the government would make Alphabet divest its Chrome browser as a consequence of its illegal monopoly verdict. However, a judge ruled Alphabet would not have to do so, and the stock has climbed since then. Cramer conceded that he made a mistake in selling Alphabet for the CNBC Investing Club’s Charitable Trust.

“No company is completely in control of its own destiny,” he said. “But these seven? They come as close as anyone ever has, which is why I believe that their best days are still in front of them.”

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Disclaimer The CNBC Investing Club owns shares of Nvidia, Microsoft, Meta, Apple and Amazon.