Meta platform ,Meta 1.04%,, Microsoft ,Msft -0.28%,And Nvidia ,NVDA 1.74%, The other four are knocking at the high level doors of all time, while the other four “Fantastic seven “stock , Heroic, Alphabet, TeslaAnd Apple – Are below the year. What did you give?

Here it is that Artificial Intelligence (AI) Mudrikation is an important discriminatory factor that separates meta, microsoft and Nvidia from the rest of the pack – and why all three Growth stock There may still be space to walk forward.

AI difference

Meta, Microsoft and Nvidia benefit from AI in various ways. These benefits can be the primary cause of strong performance relative to all three shares. S&P 500 year to date.

Meta Data by Ycharts

Meta uses AI to improve its algorithm, keeps users busy and connects advertisers with potential buyers. Long users live on Meta’s family (Instagram, Facebook, WhatsApp and Threads), they become equally attractive for advertisers.

Meta is expanding its AI investments Capital expenditure In other AI attempts like the Meta AI app. Launched on 29 April, the large language model of the app Mata, is built with the latest version of Lama 4. The app offers an individual AI experience designed around the voice conversation.

Microsoft has made its Microsoft 365 suite (Word, Excel, PowerPoint, Outlook, etc.) through AI feature to Copilot, GITHUB Copilot for Github Copilot, Github Copilot, Cloud Computing Ai Ai AII Has integrated. AI presents the most impressive product upgrade in years for Microsoft’s Ligi Software Suit and Intelligent Cloud Platform.

Nvidia creates graphics processing units (GPU), which are power data centers that are workheors. Growing AI will require more computing power to adopt and support AI model growing complexityNvidia AI is an undisputed leader in providing a complete pile of computing solutions including hardware (GPU), software and other cloud-based solutions.

Meanwhile, NVIDIA AI Software Tools such as Cuda and Tensorrt help developers use NVidia GPU for everything from general-revered computing work to deep learning models.

Runway to increase future earnings

The market hates uncertainty, but it also loves companies with a clear vision to increase revenue and convert capital expenditure into free cash flow. Meta, Microsoft and Nvidia all have many ways to increase earnings.

Meta has steadily increased its advertising revenue and profitability over time, thanks to the innovations of Instagram in short-form video through reels to a large extent. Despite the success of the Meta AI app or other Meta projects, the company can still generate concrete development from its family alone alone.

Microsoft is in a similar boat. It benefits from AI, but it is not a pure-play AI company. Microsoft Produces a ton of cash This can directly funnel in long -term development projects, while still there are lots of dry powder to manage its operational expenses and return cash to shareholders through buybacks and dividends.

NVIDIA has changed its business to a majority of the data center-focused business from being largely dependent on gaming, professional visualization, cryptocurrency and other end markets. This concentration makes Nvidia more than a pure-play AI, compared to meta and microsoft, which comes with high risk and high potential reward.

What is more, the sky-high operating margin of Nvidia has helped the company to convert a sufficient amount of revenue into profit. But in AI spending, margins may be eroded over time due to competition or recession. Even if this happens, the company can still increase earnings at a stable rate – not just at the speed, investors have not been addicted in recent years.

due diligent

Despite improving the S&P500 and their magnificent seven comrades so far this year, Meta, Microsoft, and Nvidia all game surprisingly appropriate assessment.

TSLA PE Ratio (further) Data by Ycharts

Except Tesla at the high end and the alphabet at the low end, most of the magnificent seven are Ahead price-to-earning ratio In the mid -30s in the mid -20s. This price is far from the field, but it is not expensive, given how far these shares have climbed in recent years.

As mentioned, high margins of Meta, Microsoft and Nvidia are a major reason for their future earnings to be optimistic. And, there is no surprise, the highest among these three companies profit margins the magnificent Seven.

Nvda profit margin Data by Ycharts

51.7% profit margin of NVIDIA means that it converts more than half of each dollar in sales into net income. That level of profitability is almost unheard, especially for majority hardware company. It also provides a cushion by which the margin of Nvidia can come down and it will still be an unprecedented business.

Give, it is important to note that the profit margin is not a comparison of apple-to-app. The advantage of Amazon is less visible due to its high-length but low-margin e-commerce business. The Amazon web services creates a fraction of the total sales of Amazon, but contributes to the majority of its operating income as it is such a high-margin section. Similarly, Tesla’s primary business is manufacturing cars-traditionally low-margin business.

Three stocks that can continue performing better than S&P 500

Meta, Microsoft, and Nvidia stand out as long-term winners due to their established and industry-mission high-margin business models, reverse and proper evaluation from AI. However, these stocks are not cheap.

The recession of development may see any of these stocks more expensive in the near period. So if you have a horizon at a time of at least three to five years of investment, it is best to complete these names only.