3 Top Fund Managers on What’s Next for the Magnificent 7

The tech giants known as the Magnificent Seven have enjoyed massive returns over the past few years but have seen their stock prices ride a roller coaster over the last few months. What’s the outlook for these mega-sized stocks? At the 2025 Morningstar Investment Conference, three top large-growth fund managers sat down with Tony Thomas, associate director of equity strategies for Morningstar Research Services, to discuss their thoughts on these companies.

The panel featured Dan Davidowitz, portfolio manager for the Polen Growth strategy at Polen Capital, Aziz Hamzaogullari, chief investment officer and portfolio manager for the Loomis Sayles Growth strategy at Loomis Sayles, and Chris Lin, portfolio manager for the Fidelity OTC strategy at Fidelity. Here’s what they had to say about the Magnificent Seven.

Alphabet: Threat of Regulation

• Weight in Polen Growth: 3.8%
• Weight in Loomis Sayles Growth: 5.5%
• Weight in Fidelity OTC: 9.3%
• Weight in Russell 1000: 6.1%

Both Davidowitz and Lin see regulation as a large risk to Alphabet’s business after US District Court Judge Leonie Brinkema ruled that the company has an illegal monopoly in the sell-side ad market. “The FTC ruling with Google certainly opens up a large gaping hole in their services business, potentially the Epic case too,” said Davidowitz.

Lin added that out of all the Magnificent Seven stocks, he believes Alphabet faces the greatest risk from regulation.

Alphabet has a Morningstar Rating of 4 stars and a wide economic moat.

Amazon: Consistent Small Risks Have Paid Off Big

• Weight in Polen Growth: 11.1%
• Weight in Loomis Sayles Growth: 5.5%
• Weight in Fidelity OTC: 6.6%
• Weight in Russell 1000: 6.5%

Hamzaogullari likes Amazon’s track record of taking consistent small risks that have paid off over time. “For example, AWS, when they first started, had little question marks,” he said. “Now more than half of the company’s profits are coming from AWS.” He also noted a similar story came from the company’s endeavors into shipping and advertising. “I remember Jeff Bezos saying, ‘If you don’t take small risks, you’re going to take one giant risk.’ If you get to that point, it won’t be good for you as a company.”

Amazon has a Morningstar Rating of 4 stars and a wide economic moat.

Apple: Are Consumers Willing to Look Past AI Capabilities?

• Weight in Polen Growth: 2.1%
• Weight in Loomis Sayles Growth: 0.0%
• Weight in Fidelity OTC: 14.2%
• Weight in Russell 1000: 9.8%

Davidowitz, who recently sold Apple, said the company’s growth thesis has been declining of late. In addition to the threat of regulation and tariffs, he points to the Apple Intelligence launch. “When we saw Apple Intelligence at the Worldwide Developer Conference, we thought it would catalyze a very large upgrade cycle for iPhones,” he said. “It quickly became clear that there are problems with Apple Intelligence. It’s a very ‘un-Apple’ thing—Apple doesn’t demo stuff and then a year later not have the stuff.”

Lin, whose fund holds a significant weight in Apple, believes consumers are willing to overlook this due to the firm’s strong brand and ecosystem. He asked audience members to raise their hands if they would keep using and buying iPhones even if the AI assistant was of lower quality than those from competitors. More than half of the audience did so.

Apple has a Morningstar Rating of 3 stars and a wide economic moat.

Meta Platforms: Will the Metaverse Provide a Return on Investment?

• Weight in Polen Growth: 0.0%
• Weight in Loomis Sayles Growth: 7.2%
• Weight in Fidelity OTC: 3.9%
• Weight in Russell 1000: 4.5%

Davidowitz said Meta has the worst capital allocation of all the Magnificent Seven. Specifically, he does not believe the investment in their open-source large language models will pay off. “When they originally started the Metaverse investment, we were quite depressed that they were spending $14 billion a year on something that we deemed was going to have no return or a negative return on investment.”

Meta has a Morningstar Rating of 3 stars and a wide economic moat.

Microsoft: AI Already Driving Revenue

• Weight in Polen Growth: 7.1%
• Weight in Loomis Sayles Growth: 4.4%
• Weight in Fidelity OTC: 10.5%
• Weight in Russell 1000: 11.3%

Unlike most software companies, Microsoft has quantified a large amount of revenue ($10 billion annualized) that has already come from generative AI, Davidowitz noted. “Nobody’s even close to that,” he said. “ServiceNow, which we own as well, is running in about the $250 million-$300 million run rate. So the gap is giant between Microsoft and everybody else.” He noted that the firm’s AI assistant, Copilot, is tied in with its suite of software, which is already embedded in businesses across the globe.

Microsoft has a Morningstar Rating of 3 stars and a wide economic moat.

Nvidia: Cyclical Business Creates Risks

• Weight in Polen Growth: 0.0%
• Weight in Loomis Sayles Growth: 8.0%
• Weight in Fidelity OTC: 10.0%
• Weight in Russell 1000: 10.6%

Davidowitz explained that he does not own Nvidia due to its downside risk. “We want durable, consistent, year in, year out revenue and earnings growth,” he said. “Nvidia certainly has that right now, but there will be a time where you hit the downside of a cycle for every semiconductor company. And we’ve owned Nvidia through down cycles before, and they are particularly vicious. There’s no recurring revenue in Nvidia’s business model.”

Nvidia has a Morningstar Rating of 3 stars and a wide economic moat.

Tesla: A Software Platform or a Carmaker?

• Weight in Polen Growth: 0.0%
• Weight in Loomis Sayles Growth: 6.5%
• Weight in Fidelity OTC: 0.1%
• Weight in Russell 1000: 3.3%

Hamzaogullari, the only manager on the panel with a substantial weight in Tesla, said he likes the firm’s innovation and ability to disrupt different industries, such as auto manufacturing and distribution. In the manufacturing business, he pointed to the company’s 100% vertically integrated manufacturing process, which differs from those of other major brands, such as General Motors and Toyota. In the distribution space, he pointed to Tesla’s dealer-free model for selling cars.

Lin added that the company’s growth potential lies in its ability to expand its business beyond car manufacturing. “Tesla, I think, is conceptually very simple,” he said. “Do you believe Elon Musk or not? If you believe him that it’s more than a car company, that it’s a tech company that’s a platform and cars are just the first act, then you should probably buy it. If you don’t, then you shouldn’t.”

Tesla has a Morningstar Rating of 2 stars and a narrow economic moat.