Ranking the Best "Magnificent Seven" Stocks to Buy for 2026. Here's My No. 5

When you're looking at the Magnificent Seven stocks , there's a clear outlier. Most of them are straight tech companies that are deeply involved in creating artificial intelligence infrastructure, hardware, or software that either makes AI work better or provides unique services. Then there's an automotive company, Tesla ( TSLA 0.15%), that is the leading manufacturer of EVs and rode a wave of investor enthusiasm to be the biggest automaker in the world by market capitalization. Tesla currently has a market value of $1.6 trillion. But Tesla has had an interesting year as CEO Elon Musk watched auto sales (and profits) drop. He got involved in domestic and global politics, and the company's still feeling the effects of that. Competition is fierce, and it's a challenging time to be an automaker. However, Tesla is much more than just a car company. It has massive AI aspirations of its own, and that's why Tesla is my fifth-ranked Magnificent Seven stock to buy for 2026. This is the third in a series of articles ranking the best Magnificent Seven stocks -- the grouping of companies that collectively represent one-third of the weighting of the S&P 500 , and therefore have an oversize impact on the stock market. In previous articles, I discussed why Apple is No. 7 on the list , and . Amazon took the sixth spot Here's a closer look at Tesla and why it's deserving of the No. 5 ranking. Image source: Tesla. About Tesla stock Tesla makes most of its money selling electric vehicles . But the problem is that it's not selling as many cars now as it did in previous years. Yes, third-quarter sales set company records for deliveries with 497,099 vehicles. But that was attributed to a $7,500 electric vehicle tax credit that expired on Sept. 30 -- customers merely accelerated their purchases to beat the deadline. Metric Q1 2025 Q2 2025 Q3 2025 Automotive deliveries 336,681 384,112 497,099 Year-over-year change (13%) (13%) 7% Source: Tesla That had a dramatic impact on Tesla's revenue numbers, which saw massive drops in the first two quarters of the year. Metric Q1 2025 Q2 2025 Q3 2025 Automotive revenues $17.38 billion $19.88 billion $20.02 billion Year-over-year change (20%) (16%) 6% Total revenue $21.30 billion $25.50 billion $25.18 billion Year-over-year change (9%) (12%) 12% Source: Tesla And to make things even worse, Tesla's profit margins dropped during the same period, as competition from other automakers forced Tesla to lower its prices. Metric Q1 2025 Q2 2025 Q3 2025 Operating margin 2.1% 4.1% 5.8% Year-over-year change (343 bp) (219 bp) (501 bp) Source: Tesla But competition is only part of the problem. Tesla faced severe blowback this year after Musk leapt wholeheartedly into politics, pouring millions of dollars into President Donald Trump's successful campaign and appearing with him at several events. Musk spent the first several months of Trump's second term as a close confidant, running the newly formed Department of Government Efficiency (DOGE) with a mission to reduce the...

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