3 Oversold Magnificent Seven Stocks at Key Levels: Buy Now?

Key Points

•  U.S. stocks fell sharply due to economic concerns and fears over President Trump’s tariffs.
•  Despite their influence, the Magnificent Seven stocks have struggled with the Roundhill Magnificent Seven ETF (MAGS) in the red YTD.
• Several Magnificent Seven stocks, like Alphabet and Amazon, are trading near their 200-day SMAs, a key support level.

U.S. stocks turned sharply lower over the previous weeks, weighed down by economic concerns and a shifting sentiment landscape. Fears that President Trump’s tariffs could negatively impact the world’s largest economy further accelerated the selloff, pushing U.S. equities into the red year-to-date (YTD). However, a late Friday rally pared losses, with the benchmark SPY ETF closing the week up 1.38% YTD.

Despite the bounce, equities remain under pressure, reflecting a cautious, risk-off stance as investors grapple with stretched valuations and looming earnings worries. This dynamic is visible in the performance of the Magnificent Seven stocks, seven of the largest, most influential companies in the U.S. market. Interestingly, the Roundhill Magnificent Seven ETF NASDAQ: MAGS, which tracks these tech titans, is in the red YTD.

Yet, an intriguing setup is forming: several Magnificent Seven stocks have tumbled toward their crucial 200-day simple moving averages (SMA), a level often viewed by technical traders as a key support zone. Historically, touching or dipping below the 200-day SMA can signal a potential buying opportunity, particularly if forward valuations look more reasonable.

Is this the moment to dip buy these tech giants as they hover around significant support levels? Let’s break down three beaten Magnificent Seven stocks that may be offering a compelling risk-reward profile right now.

1. Alphabet 

Alphabet NASDAQ: GOOGL has entered correction territory, down nearly 18% from its 52-week high as of Friday’s close. The stock took a hit after its latest earnings report, where it narrowly beat EPS estimates but fell short on cloud revenue. Concerns over decelerating growth and aggressive AI spending also spooked investors.

Despite the selloff, Alphabet trades at a forward P/E of 16.6, flirting with value stock territory. However, it has fallen below its 200-day SMA. With earnings growth expected in the coming year, a $0.20 quarterly dividend, and $70 billion in authorized share buybacks, the current valuation suggests that Alphabet might be a bargain for those eyeing a recovery. If the stock can reclaim its 200-day SMA, it could spark renewed bullish momentum.

2. Amazon

Amazon NASDAQ: AMZN has also retreated into correction territory, sliding 12.4% from its recent 52-week high. Although the stock remains up over 40% from its 52-week low, the broader market downturn has weighed on its momentum. Even after strong earnings that crushed EPS and beat revenue estimates, forward guidance and AI spending concerns dampened investor enthusiasm.

Currently, Amazon sits at a forward P/E of 27.8 and hovers near its 200-day SMA around the $200 mark. Should the selling persist, pushing its valuation even lower and the stock closer to its 200-day, Amazon might enter into dip-buying territory. With solid EPS growth projections for the upcoming year, a bounce off the 200-day SMA may present an attractive entry point for long-term investors.

3. Tesla 

Tesla NASDAQ: TSLA has been one of the worst-performing S&P 500 stocks YTD, shedding a staggering 40% from its 52-week high. However, the stock found support near its 200-day SMA on Friday and rallied into the close, a potential sign of a short-term bottom.

Unlike Alphabet and Amazon, Tesla’s forward P/E remains elevated at 76. Tesla's shareholders have incredibly high expectations for future growth tied to expectations of AI, autonomy, and robotics projects. In a post on X, CEO Elon Musk recently forecasted a potential 1,000% profit surge over the next five years, contingent on "outstanding execution" in advancing Tesla's Robotaxi and Optimus humanoid robot initiatives.

From a purely technical standpoint, Tesla’s bounce off its 200-day SMA and alignment with prior resistance levels suggest a favorable risk-reward setup. If Tesla holds this key support, it could mark the beginning of a broader turnaround.

The Bottom Line

The Magnificent Seven stocks have undeniably experienced a rough start to the year, with several slipping into correction territory and testing critical technical levels. While AI hype and growth fears loom, these recent pullbacks have brought select names, like Alphabet, Amazon, and Tesla, closer to their 200-day SMAs, potentially offering dip-buying opportunities for investors willing to stomach some volatility.

Of course, the path forward hinges on broader market sentiment, macroeconomic developments, and company-specific execution. But these three tech giants might be flashing buy-the-dip signals for those eyeing high-risk-reward setups.