Mag-7: Top Stock Pick for 2025 Year-End

The article discusses the Mag-7 market leaders and their earnings results, with a focus on selecting a top pick for 2025. The author identifies that most earnings results are in and provides an assessment of how each stock is likely to trend during the final year. The article does not specify which company is the top pick, but suggests that this information will be provided in a future article.

The Magnificent Seven (Mag-7) tech giants—Meta Platforms Inc. (META), Microsoft Corp. (MSFT), Apple Inc. (AAPL), and Amazon.com Inc. (AMZN)—have been the darlings of the market for years. However, their recent earnings reports suggest a significant shift in their spending patterns, with substantial capital expenditures (CapEx) allocated to artificial intelligence (AI) initiatives. This article provides an objective assessment of their earnings results and offers insights into their likely trends for the remainder of 2025.

Meta Platforms Inc. (META)

Meta reported a strong second-quarter performance, with revenue of $47.52 billion and earnings per share of $7.14, surpassing analyst expectations. However, the company boosted its CapEx forecast to between $66 billion and $72 billion, up from the previous range starting at $64 billion. This significant increase is attributed to investments in AI, such as the $14.3 billion acquisition of Scale AI and the creation of Meta Superintelligence Labs. Meta's total expenses for 2025 are projected to be between $114 billion and $118 billion, raising concerns about the company's ability to sustain such high spending levels [1].

Microsoft Corp. (MSFT)

Microsoft's fiscal fourth-quarter results were also impressive, with earnings per share hitting $3.65 and revenue reaching $76.44 billion. The company expects over $30 billion in capital spending for the first quarter of fiscal year 2025, resulting in an annual growth of over 50%. This spending is primarily focused on AI infrastructure and data centers, with Microsoft projecting to hit over $120 billion for the full fiscal year. The company is facing data center infrastructure shortages, and while it aims to improve this situation by December, the current pace of spending raises concerns about its long-term sustainability [1].

Apple Inc. (AAPL)

Apple delivered solid third-quarter results, with revenue jumping 10% and earnings per share coming in at $1.57. However, the company faces tariff costs, which could reach about $1.1 billion in the September quarter. CEO Tim Cook warned investors that these tariffs could weigh heavily on the company's ambitions. While Apple's AI spending is not as high-profile as Meta's or Microsoft's, the company's overall spending and tariff costs could impact its ability to grow into its high valuation [1].

Amazon.com Inc. (AMZN)

Amazon also reported strong third-quarter earnings, with $1.68 per share and $167.7 billion in revenue. However, the company's AI spending is becoming increasingly expensive. Amazon's free cash flow nosedived to $18.2 billion from $53.9 billion last year, as it ramped up capital spending on AI infrastructure. The company spent $32.2 billion on property and equipment this quarter, close to double last year's $17.6 billion. Amazon has pledged to spend up to $100 billion this year, mostly on AI-related investments. This aggressive spending, coupled with competition from Microsoft Azure and Google Cloud, raises questions about Amazon's long-term financial health [1].

Conclusion

The Mag-7 market leaders are investing heavily in AI, with substantial CapEx spending expected to continue. While their earnings results have been strong, their aggressive spending patterns raise concerns about their ability to sustain these high levels. Investors should closely monitor these companies' financial health and the impact of their AI spending on their long-term sustainability.

References

[1] https://investorplace.com/smartmoney/2025/08/mag-7-ai-spending-spree-trouble-look-here/