Growth Stocks Better Than The Mag 7 To Buy Today

If you’re heavily invested in the Magnificent Seven stocks (if you own S&P 500 or Nasdaq 100 ETFs, you’ve already got this base covered), you’re probably delighted with the returns you’ve gotten over the past couple of years.

And while the terrain could get a bit rougher and somewhat less rewarding moving forward, as valuations and expectations rise in the face of potentially overlooked risks that lie ahead (are investors too upbeat on a more dovish Fed? What about the state of the AI boom?), I still think it’s not a good idea to subscribe to the “AI bubble” chatter by selling out your tech-focused names, especially the ones that are still generating fantastic earnings with valuation metrics that aren’t yet absurdly high.

In short, the Magnificent Seven group is great and I wouldn’t bet against them, even now that September has arrived, and, with that, the potential for a volatility storm. Indeed, the days of sleepy August trading days are over, and post-Labor Day, we’ll get a glimpse of how investors are ready to respond to what’s been a fairly decent summer for mega-cap tech.

Just because the Mag Seven trade has what it takes to level up in the final quarter doesn’t mean it’s the only tech names worth picking up as we head back into return-to-school season. There are some highly underrated and discounted growth stocks, particularly in the software space, that I believe offer significant value for money. And in this piece, we’ll look at two such names.

Salesforce

Despite its Agentforce platform and promising potential in the agentic AI race, Salesforce (NYSE:CRM) has not been an AI winner this year. The stock is actually down more than 22% at the time of this writing, thanks primarily to the fear that software (specifically Software-as-a-Service or SaaS) firms will face disruption at the hands of AI. Personally, I think the sell-off in software is overdone, especially when it comes to enterprise titans, like Salesforce, that are leveraging AI to get ahead.

Is Agentforce off to a relatively slow start? Most definitely. But it has the potential to close ground, especially as the company finds ways to make its agentic platform more useful and easier to deploy. Time will tell when agents will become useful enough to incentivize more firms to take the plunge. Either way, I wouldn’t bet against Salesforce, given its rock-bottom multiple and the visionary leadership of its top boss, Marc Benioff.

With the firm reportedly cutting 4,000 support roles at the hands of AI agents, I do think Salesforce is showing us all the power of its offering. Could this move be the real kick-off to the agentic AI race? Time will tell. Either way, CRM stock looks like a bargain at just north of 22 times forward price-to-earnings (P/E).

Netflix

For investors not interested in buying into weakness, perhaps Netflix (NASDAQ:NFLX) is a better name to consider. At more than $1,200 per share and 51.5 times trailing P/E, the video streaming giant does not come cheap. But given its potential to monetize AI (to assist with editing or to generate content), I do see the premium price tag as still worth paying. With shares slipping close to 10% since its early-summer peak, perhaps now’s a good time to put some money to work.

The firm’s KPop Demon Hunters film is a stellar performer, and with a historic boxing match (Canelo Alvarez vs. Terrence Crawford) just weeks away, I’m inclined to view a Netflix subscription as more of a must-have than a nice-to-have, even when times get tough and the price goes on the rise.

The next recession will tell how well Netflix holds up to the rest of the market. My guess is it’ll fall less than the broad market, given its defensive attributes and the value proposition it provides. With the potential to win big in AI and a wild card in “phygital” entertainment with its Immersive Houses to be located in various big American malls, I am intrigued by the streamer as it continues to show the world it’s comfortable growing well beyond its circle of competence for a shot at more growth.

The post Growth Stocks Better Than The Mag 7 To Buy Today appeared first on 24/7 Wall St..