Which Underperforming "magnificent Seven" Stock…

By David Jagielski, CPA – Apr 14, 2026 at 1:00PM EST

Key Points

The “Magnificent Seven” stocks have been struggling in 2026, with Microsoft and Tesla being the worst of the bunch thus far.
Microsoft has been investing in artificial intelligence (AI), and management sees a lot of potential, but investors haven’t been convinced thus far.
Tesla’s worsening financials due to competition have weighed on its valuation, but it has tremendous growth opportunities that go beyond just electric vehicles.

The case for Microsoft stock

Microsoft’s stock is off to one of its worst starts in years. I’m not surprised there has been a bit of a correction simply because the tech stock was highly valued entering the year and trading at a sizable premium. But for it to be one of the worst performers in the Magnificent Seven is definitely a little surprising.

The business itself remains solid, with Microsoft generating 17% revenue growth in its most recent quarter (which ended on Jan. 28). The company has been investing in artificial intelligence (AI), and CEO Satya Nadella says that the company’s AI business is already “larger than some of our biggest franchises.” Investors may simply have been investing a bit more in growth if that were the case, particularly in its cloud business, Azure, which has been experiencing a slowdown in growth. Even though it hasn’t been a massive slowdown for Azure, the problem with a stock that’s trading at a high valuation is that expectations can be high and difficult to meet.

Microsoft Stock Quote

NASDAQ: MSFT

Microsoft

Today’s Change

(2.67%) $10.26

Current Price

$394.63

Key Data Points

Market Cap

$2.9T

Day’s Range

$386.55 – $394.68

52wk Range

$355.67 – $555.45

Volume

981K

Avg Vol

37M

Gross Margin

68.59%

Dividend Yield

0.91%

However, with strong fundamentals and promising opportunities related to AI, Microsoft’s stock remains one of the best blue chip stocks to own. And right now, with the stock trading at 24 times its trailing earnings, which is in line with the average S&P 500 stock, it could be a great time to load up on a potential long-term bargain.

The case for Tesla stock

s of electric vehicle (EV) maker Tesla have been in a tailspin this year as uncertainty about its long-term growth has weighed on its valuation. Competition has been ramping up and squeezing its margins, resulting in some disappointing numbers. Last year, Tesla’s net income was $3.8 billion — down from $7.1 billion a year earlier.

However, with the company in the early innings of rolling out robotaxis and planning to build and sell robots to customers, potentially as soon as next year, Tesla’s growth prospects are promising. If it’s able to deliver on its ambitious targets, the EV stock could easily soar in value. Many investors and analysts also believe that it’s only a matter of time before Elon Musk merges Tesla with the soon-to-be public SpaceX, which may unlock even more value in the future.

Tesla Stock Quote

NASDAQ: TSLA

Tesla

Today’s Change

(3.70%) $13.05

Current Price

$365.47

Key Data Points

Market Cap

$1.3T

Day’s Range

$354.86 – $367.63

52wk Range

$222.79 – $498.83

Volume

1.9M

Avg Vol

62M

Gross Margin

18.03%

For long-term investors who can look past Tesla’s current EV struggles, there are many reasons to consider buying the stock right now, even though its valuation may appear egregious — it trades at more than 300 times its trailing earnings.

Microsoft is the better buy for 2026, but Tesla might have more upside in the long run

The stock that’s more ly of the two to bounce back this year looks to be Microsoft. Its growth rate may be underwhelming to some growth investors, but with an extremely attractive valuation, it may only be a matter of time before value investors realize the deal they’re getting with the blue chip stock. Meanwhile, a SpaceX IPO might overshadow Tesla this year and prompt more investors to pull money out of the EV stock and into the next big growth opportunity.

However, for investors who can stomach the volatility and uncertainty, Tesla may be the better buy over the long term, but that’s only if it can execute on its lofty goals. They are ambitious, and if you’re a believer in Musk and are willing to be patient, then Tesla could indeed generate returns greater than Microsoft in the longer term, but it’s by no means a guarantee.

Overall, go with Microsoft if you’re looking for more of a sure thing, but Tesla can be suitable if you’re willing to wait and believe in Musk’s vision for the company.