What were the Nifty 50?
The “Nifty 50” was a group of 50 of the most followed, large-cap stocks on the NYSE that flourished in the 1920s and early 1970s. The group of stocks included well-known, popular companies such as Walmart (WMT), Polaroid, Xerox (XRX), and Coca-Cola (KO). During the early 1970s, the Nifty 50 stocks commanded an average price-to-earnings (P/E) ratio of 40x, more than double that of the S&P 500 Index. During the 1973-1975 recession, many Nifty 50 companies suffered drawdowns of 50% or more. Nevertheless, despite the bubble narrative, these stocks registered above-average returns from 1972 to 1998.
Comparing the Nifty 50 to the Magnificent 7
Many Wall Street investors and analysts have compared the Nifty 50 to the “Magnificent 7” stocks, which include Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA). Like the Nifty 50, the Mag 7 stocks are growing rapidly and are trading at higher valuations than the market. Barring an early-70s-style recession, Mag 7 stocks still look extremely attractive here and have plenty of meat on the bone.
Mag 7 Stocks are Very Cheap
As of February 2026, the average forward price-to-earnings ratio (P/E) for the Mag 7 is ~28x. Meanwhile, the forward P/E of the S&P 500 is in the same ballpark at ~23.5x. Although most Mag 7 stocks have been up trending for a decade or more, the group of leaders is currently trading at the lowest premium compared to the S&P 493 in the past decade.
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Are Mag 7 Stocks “GARP” Plays?
Savvy investors understand that analyzing valuation metrics in a vacuum is a fool’s errand. A P/E ratio merely tells you what investors paid for past earnings. However, Wall Street is a device for discounting the future. What really should matter to investors is growth relative to valuations. It’s worth noting that in the late 1990s, many internet leaders like Yahoo! had P/E ratios that were north of 50x BEFORE their meteoric, life-changing moves.
Currently, most Mag 7 stocks are transforming into “Growth at a Reasonable Price” (GARP) plays. In other words, these stocks have the best of both worlds – reasonable valuations, with high-expected growth. For instance, though NVIDIA is a $4.6 trillion behemoth, Zacks Consensus Estimates suggest that top-and-bottom-line growth will come in around 50% over the next two years.
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MSFT is another prime example of a GARP play. Although its earnings are not growing as fast as NVIDIA’s, MSFT is still expected to grow top-and-bottom-line results at a double-digit clip. Meanwhile, MSFT’s P/E ratio is at its lowest level since late 2022 (just before MSFT went on a multi-month rally following the successful launch of ChatGPT).
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Bottom Line
While market skeptics are quick to scream “bubble” at any sign of concentrated market leadership, the underlying fundamentals of today’s tech titans tell a more nuanced story. With valuations trading at decade-low premiums relative to their growth trajectories, these companies aren’t just market leaders-they are becoming disciplined GARP plays.
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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
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Meta Platforms, Inc. (META) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
