Broadcom and Oracle’s Blowout Earnings Just Proved Why It’s Time to Forget the "Magnificent Seven"

Tech Titans Deliver Knockout Quarter—While FAANG Stocks Look Increasingly Like Yesterday's News

Earnings That Speak Louder Than Hype

Broadcom and Oracle just dropped financial results that left Wall Street scrambling. No vague promises about AI potential—just hard revenue numbers that actually materialized. Meanwhile, the so-called Magnificent Seven keep trading on potential rather than performance.

The New Guard Takes Over

While legacy tech giants debate whose AI strategy sounds more impressive, Broadcom's semiconductor dominance and Oracle's cloud infrastructure expansion are printing real cash. They're executing while others are still presenting PowerPoint decks to investors.

Wall Street's Selective Amnesia

Analysts suddenly remember that fundamentals matter when companies actually deliver them. The market's obsession with seven overhyped stocks always felt more like narrative convenience than actual analysis—but then again, most fund managers would rather follow trends than find value.

Time to rewrite the playbook—because the real magnificence is in performance, not popularity.

Image source: Getty Images.

Broadcom is a balanced way to invest in AI

Broadcom and Oracle's surging stock prices illustrate how AI is redefining previously stagnant investment theses. Just a few years ago, both companies were often viewed as dividend-paying stalwarts.

Broadcom was known for its established semiconductor business, providing the nuts and bolts behind networking, broadband, wireless, cybersecurity, and more. But the company is completely different today due to its acquisition of VMware in late 2023 and the development and adoption of its AI chips.

Cloud computing giants are lining up to buy Broadcom's AI chips, known as XPUs. XPUs are highly advanced application-specific integrated circuits (ASICs) that are tailored to a specialized function and are especially good at handling increasing AI workloads. Broadcom doesn't just design the chips, it also makes associated networking products, like Tomahawk switches that LINK chips within a server rack, and Jericho Ethernet fabric routers, which enable the connection of over 1 million XPU clusters across multiple data centers.

Broadcom is unique because it is far bigger than just an AI play. Rather, it is a highly diversified company that benefits from the buildout of AI infrastructure, AI software, and the growth of high-speed connectivity.

Oracle is heavily disrupting incumbent cloud giants

Oracle's latest quarter perfectly represents why Broadcom has become a behemoth that is closing in on $1 trillion in market cap. On Sept. 9, Oracle said that its cloud infrastructure segment is expected to grow 77% in fiscal 2026, 78% in fiscal 2027, 128% in fiscal 2028, and 97% in fiscal 2029 to become a $144 billion business. If Oracle comes remotely close to these estimates, its cloud business will become far larger than its legacy database services segment.

Like Broadcom, Oracle was once an entrenched business-to-business giant in tech, known for its stodgy growth and reliable dividend. But Oracle is now a completely different company. Its strength comes from its competitive pricing model, which makes Oracle Cloud Infrastructure (OCI) a great add-on for customers that use its database services.

Oracle is an enterprise-facing company. Whereas investors in the "big three" cloud players, Amazon, Microsoft, and Alphabet, are getting a lot of moving parts that have nothing to do with cloud computing. In this vein, Oracle has become one of the best ways to invest in high-octane cloud growth, somewhat similar to how investors are drawn to Nvidia. Nvidia has become a pure-play AI stock because its data center business is now magnitudes larger than its gaming and professional visualization markets.

Broadcom and Oracle's stock prices are running up far faster than they are growing earnings because investors are buying these stocks for where they could be years from now rather than where they are today. Forward earnings estimates will probably increase as analysts adjust their targets based on recent results and guidance. But for now, Broadcom's forward price-to-earnings ratio is a staggering 54.8 compared to 48.2 for Oracle. For context, Nvidia's forward P/E is 39.5 -- meaning investors are even more excited about Broadcom and Oracle's growth.

Broadcom and Oracle are moving markets

The breakneck growth rates and size of Broadcom and Oracle prove why it's time to forget the Magnificent Seven and use the Ten Titans as a better descriptor for market-moving growth stocks. Even folks who don't own the Ten Titans outright may be indirectly impacted through their holdings in index funds and exchange-traded funds.

In addition to their foundational role in the major indexes, the Ten Titans will likely make or break broader market sentiment. If the S&P 500 keeps making new highs, it's probably because of the Ten Titans. If it undergoes a major sell-off, it's probably because a few key Titans fell. You may have even seen headlines about how the S&P 500 is expensive relative to its historical valuation. That's because many of the Ten Titans are valued more for their future earnings than their current profits. So investors should only approach these stocks if they have a high risk tolerance, a long-term time horizon, and believe these companies can deliver on highly optimistic expectations.

It's also worth noting the correlation that these companies can have. For example, Oracle's blowout quarter sent Broadcom and Nvidia soaring on Sept. 10 because Oracle is a major customer of these chip makers. Increased AI spending to build out OCI benefits Broadcom and Nvidia. Although Oracle may account for less than 2% of the S&P 500, its results had a significantly larger impact on the S&P 500 than the movement in its stock price alone.