Niles Investment Management founder Dan Niles expects the “Magnificent Seven” names to post a strong second quarter– but he’s not entirely convinced that the stocks will push meaningfully to the upside.
In a recent interview with CNBC, Niles quoted examples of Alphabet and Netflix– both of which recorded upbeat results last week, but their respective share price response has been rather muted, raising concerns of lofty valuations and stretched positioning.
While high multiples and priced in optimism are making Niles approach upcoming tech earnings with caution, he still sees opportunity in select names with strong fundamentals, relative insulation from tariffs, and resilient growth narratives.
Here are the top 2 “Magnificent Seven” stocks Niles recommends owning heading into earnings.
Microsoft Corp (NASDAQ: MSFT)
Dan Niles is super bullish on Microsoft stock and views it as a top pick for the ongoing earnings season. On “Squawk on the Street”, he pointed to Azure’s turnaround as a key driver of renewed optimism.
After three consecutive quarters of disappointing cloud growth last year, Microsoft saw Azure reaccelerate in the March quarter, growing 2% faster than in December.
This rebound coincided with the company’s restructuring of its OpenAI partnership through the Stargate deal, which Niles believes will continue to pay dividends.
He also highlights MSFT shares’ rough performance last year as a setup for stronger relative gains now, especially as expectations remain high but not excessive.
With AI integration deepening across its product suite and enterprise demand holding steady, Microsoft appears well-positioned to deliver upside.
Niles did agree that consensus expectations are elevated, but sees enough fundamental momentum to justify owning the stock into earnings.
A 0.65% dividend yield on Microsoft stock offers another great reason to own it for the long term.
Nvidia Corp (NASDAQ: NVDA)
Another “Magnificent Seven” stock Niles recommends owning heading into the earnings is Nvidia, due to what he described as a more sustainable growth story driven by inference workloads.
While training large AI models has made the majority of artificial intelligence-related headlines so far, Niles argues that inference, where users get real-time answers, is the real long-term driver of demand.
On CNBC, the Niles Investment Management founder noted that CAPEX spending is surging in this area, providing NVDA shares with a durable revenue stream.
Dan Niles sees China re-entering Nvidia’s models, reversing earlier concerns about geopolitical risk and export restrictions.
Though Nvidia is off-cycle this quarter, he believes the company’s fundamentals remain strong and its positioning within the AI ecosystem is unmatched.
With demand shifting toward practical AI applications and infrastructure buildout, Nvidia stands out as a strategic long-term play – even if near-term expectations are high.
Note that Wall Street currently has a consensus “buy” rating on Nvidia stock.
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