November Cuts the “Magnificent 7” Down to the “Dynamic Duo”

November was a tough month for high-flying growth stocks, and the Magnificent 7 were no exception.

In the last month, Nvidia (NVDA) has shed 10.6%, Amazon (AMZN) is lower by 7.6%, and Microsoft (MSFT) has fallen 5.4%.

The biggest culprits for the selling were the possibility that the Fed would forego cutting rates in December, concerns about tech stock valuations and the massive ongoing CapEx spending by leading tech companies.
But one benefit of seeing selling pressure in market leadership is that it makes it straightforward to identify the stocks that are still outperforming.

We’ve written before about relative strength (the relative performance of a stock against another stock, fund or index), and when most leaders are declining, those that aren’t stand out like sore thumbs.

And in November, not only did two of the Magnificent 7 hold up, but they also hit fresh all-time highs.

Those two stocks, Apple (AAPL) and Alphabet (GOOG)—which we’re referring to as the Dynamic Duo—rose by 5.4% and 11.4% respectively.

Not only have they outperformed in the last month, they’ve also been the strongest Mag. 7 stocks over the last six months. We’ll look at the bull case for each of them in more detail, but first, let’s look at the performance of the Magnificent 7 as a group. (The table below is ordered by five-year returns.)

Obviously, NVDA has been a world-beater, having risen by more than 1,200% over the last five years. Those are portfolio-changing (and possibly life-changing) returns.

NVDA has been the king of the AI bull market since it began, and barring a catastrophe for the company, it’s unlikely that any of the other Mag. 7 stocks will be coming for its crown (at least as far as the next few years are concerned).

But NVDA also sold off the hardest in November, and it’s become abundantly clear that other companies are looking to bring competing chips to market, most notably Alphabet (more on that below).

NVDA was the stock you wanted to own for the last five years, no doubt about it, but let’s take a closer look at the two stocks you might want to own for the next five years.

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The Dynamic Duo: Alphabet (GOOG) and Apple (AAPL)

Alphabet (GOOG)

Outside of that five-year number (where it ranks second), GOOG has been the absolute leader over all other periods and has risen 83.4% in the last year alone, and for good reason.

Not only is the company’s Gemini model (including the Nano Banana image model) hyper-competitive, but Alphabet’s also making serious inroads on Nvidia’s turf.

Alphabet’s custom AI chips—its Tensor Processing Units (TPUs)—are purpose-built processors designed to run and train advanced artificial intelligence models at massive scale. The company’s newest generation, Ironwood, delivers major performance and efficiency gains, especially for real-time AI inference, and can be deployed in pods of more than 9,000 chips to power extremely large workloads.

By developing its own hardware, Alphabet reduces dependence on third-party chipmakers, tightly integrates its cloud, software, and AI models, and positions itself as a full-stack AI infrastructure provider. This strategy not only strengthens Google Cloud’s competitiveness but also challenges Nvidia’s dominance in the AI-chip market, signaling a future where leading tech firms increasingly differentiate through vertically integrated AI hardware.

There have been whispers about OpenAI adding advertising to ChatGPT to help monetize that model, but Alphabet/Google’s experience with ad-supported web tools should be enough to make them the winner of that race right out of the gates.

Apple (AAPL)

AAPL comes in third on the list by five-year returns, but it’s the only stock aside from GOOG to generate positive six-month and one-month returns and, more importantly, hit new all-time highs coming out of November.

We’ve written before about why Apple could be the best AI stock, but the short version is that Apple decided to sit out the massively expensive data center spending spree entirely.

Instead, Apple will be paying Alphabet a paltry $1 billion per year (paltry being a relative term compared to the tens of billions of dollars being spent by Microsoft and Alphabet) to use a custom Gemini model to shore up Siri’s AI functionality.

That’s not the total out-the-door price for an AI offering (Apple will incur some undisclosed expenses running Siri functionality on their own servers; they may also be paying for Gemini’s server use for more complex tasks), but it’s a far cry from the price of building and running your own data center.

The two companies are taking vastly different angles of attack on AI, with Alphabet betting that not only will it remain ubiquitous but also that the company can become the go-to, one-stop shop for all things AI.

Apple, on the other hand, seems to be betting that AI chatbots will be more of a novelty or that the initial wave of interest will subside and that usage of these tools will be more consistent with usage of something like Siri or Alexa (meaning, not particularly popular), or, perhaps, that Apple’s role as a consumer-first tech company is to make the best AI tools available to its users, not to build them.

Both stocks showed some remarkable relative strength in the last month, and you can do well with either (depending on how the AI-driven bull market shakes out), but given my contrarian nature and suspicions about large language models (LLMs) more generally, I’m team AAPL.

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