“Magnificent Seven” stocks are in focus as we approach a pivotal week for the US stock market, with five of them (MSFT, AMZN, AAPL, META, and GOOGL) slated to report their Q1 earnings.
These mega-cap names will offer valuable insights not just into the health of the tech sector – but the broader economy as well – particularly as investors weigh the impact of AI capex against actual bottom-line growth.
Heading into their earnings next week, a deeper dive into valuations reveals a surprising disparity.
On a free cash flow basis, one of these titans is evidently trading at a discount to its peers, offering what many analysts view as a rare window for investors seeking to capitalize on Big Tech earnings.
Meta stock is cheapest heading into Big Tech earnings
Amidst a peer group that includes a high-flying chipmaker and trillion-dollar cloud giants, META stock is the most attractively valued heading into Q1 earnings.
While conventional metrics like price-to-earnings (P/E) multiples are frequently cited, institutional investors often view cash flow as the “crème-de-la-crème” to value the Magnificent Seven names.
On that front, Meta Platforms is currently trading at just 10.81x estimates forward-year cash flow, making it significantly cheaper to own than Amazon (11.7x), Google (17.36x), Microsoft (15.54x), and Apple (25.59x).
This “screaming bargain” is underpinned by META’s dominant ad pricing power and its massive social media reach, which recently drew an average of 3.58 billion daily active users (DAUs).
Where options data suggests META shares are headed
Meta Platforms is scheduled to report its Q1 earnings on Apr. 29. Consensus is for the multinational to grow its revenue by 31% on a year-over-year basis to a whopping $55.36 billion.
The Facebook-parent’s per-share earnings (EPS) are also expected to pop some 3.7% in fiscal Q1.
Importantly, options pricing signals a bullish skew heading into the release.
According to Barchart, the upper price on contracts expiring May 1 is set at $717 currently, indicating META shares could be trading over 6% above current levels right after earnings.
Note that Meta Platforms Inc’s relative strength index (RSI) sits at about 63 at the time of writing, indicating significant further room to the upside before the stock hits “overbought” territory.
How to play Meta Platforms ahead of Q1 earnings
Bank of America analysts are also bullish heading into META’s earnings release with an $820 price target, indicating potential for another 21% rally from here.
“With the new efficiency mentality, we believe Meta Platforms is positioned for strong EPS growth when the advertising environment improves,” they told clients earlier this week.
According to the BofA analysts, META’s aggressive investments in “AI infrastructure” are already starting to bear fruit through increased ad efficiency and the launch of frontier models like “Muse Spark”.
A 0.31% dividend yield makes Meta stock even more attractive to own in 2026.
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