AI is breaking up the 'Magnificent Seven', says Plexo's Lo Toney
Speakers
Jim Cramer
— Host, Mad Money
Lo Toney
— Founding Managing Partner, Plexo Capital
Summary
Lo Toney argues AI is breaking up the Magnificent Seven into distinct buckets: hyperscalers, aggregators, physical AI, and Nvidia. He sees Google as most interesting, Apple and Meta as distribution and monetization beneficiaries, Nvidia as getting paid during the buildout, and Tesla as a physical AI story with different regulatory and unit-economics questions. The discussion responds to Jim Cramer's call that Magnificent Seven stocks are cheap and should be bought.
- Jim Cramer says Magnificent Seven stocks are cheap and time to buy.
- Lo Toney says AI is breaking up the Magnificent Seven rather than making it one trade.
- Google, Microsoft, and Amazon are hyperscalers that must prove AI infrastructure returns.
- Meta and Apple use AI to strengthen distribution and monetize their ecosystems.
- Tesla faces distinct regulatory and unit-economic pressures in physical AI.
- Nvidia monetizes the AI buildout through its hardware and software ecosystem.
- Google is Lo Toney's top AI infrastructure pick due to cloud, TPUs, and multiple monetization paths.
Ideas
Mag7 stocks are cheap; buy now.
Lo Toney argues it is a mistake to assume the Magnificent Seven is becoming one trade again because AI is breaking up the group. He separates the names into hyperscalers, aggregators, physical AI, and Nvidia, each with different drivers and economics.
Meta uses AI to monetize ads better.
Meta is an aggregator with enormous demand and distribution. It does not necessarily need AI as a standalone business, and it can use AI to monetize ads better, making its distribution franchise more valuable.
Tesla's physical AI faces distinct pressures.
Tesla is turning AI into real-world physical assets and services, but it faces a completely different set of deployment, regulatory, and unit economic pressures and questions, making it a distinct AI bucket to monitor.
NVDA gets paid during AI buildout.
Nvidia is sitting back and getting paid while everyone else proves AI economics. It monetizes its ecosystem across hardware, software, and the open model layer through Hugging Face, strengthening its ecosystem around the AI build-out.
Apple reaps AI rewards without big capex.
Apple is very valuable because it is the point of origination for many AI queries and can leverage its distribution and hardware. Apple did not make massive AI investments but is now reaping rewards.
Google owns AI infrastructure and monetization.
Google is probably the most interesting AI infrastructure name because it captures ownership benefits of AI infrastructure coupled with cloud. It has data centers, TPUs, and multiple monetization paths through search, YouTube, cloud, and increasingly Waymo.
