Why META and GOOG could take the S&P 500 to 7,000

Meta Platforms (META) and Alphabet Class C (GOOG) are among the iconic Magnificent 7 stocks, and for good reason. They have been magnificent businesses, and continue to eat the lunch of most firms that try to shave even a slice off of their well-entrenched business models. Even when they do appear to be in the process of absorbing dents, such as concerns over GOOG’s Chrome browser in an era where AI could replace traditional search engines, they find a way. GOOG is now considering an offer to sell that business. And META, once its flagship Facebook business was mature (along with many of its users) it focused on Instagram and other paths to stratifying its wide business moat.

META and GOOG: Mega-Cap Leaders in 2025’s Market Rally

These companies “print money,” or are at least as close to that as we get, this side of the Federal Reserve Bank. But their stocks are rich by traditional measures. So as the stock market speeds toward the end of summer and the part of the year where bull markets often die, can these 2 behemoths continue to lead the broad market higher? There’s a fighting chance of that.

There’s no secret here when it comes to valuation. At 28x trailing 12-month earnings, META needs to keep growing to keep the gravy train going. $2 trillion stocks like this are there for a reason, but at more than 10x sales, and up more than 50% the past 52 weeks, this one is priced for perfection. Or, for a lot more forgiveness on the part of investors. META has entered the phase of its corporate life where it is considered to be somewhat invincible. But “too big to fail” is not the same as “never big enough to avoid a market-wide selloff. With earnings out of the way, that’s the big risk to META for a couple of months.

META Profile. Source: FX Empire.

META Stock Chart Points to Continued Upside

The chart below shows that META just keeps climbing the proverbial ladder. It would appear to have more room based on that PPO at the bottom of the chart. And it will take more than a modest selloff from these levels to cause the 20-day and 50-day moving averages to reverse lower. Those would be the first signs of weakness I’d watch for.

META daily chart. Source: Barchart.

Alphabet’s Attractive Valuation and Growth Outlook

GOOG (or GOOGL if you are an A-share class devotee), is in a better spot based on traditional valuation metrics. 20x earnings for a company that is essentially a verb (“Google it”) is a bargain in today’s market. However, as indicated by the Chrome-related story mentioned above, GOOG is at risk of being considered a mature growth stock. If that becomes the market narrative, 6x sales is too high.

GOOGL Profile. Source: FX Empire.

GOOG Technicals Signal Potential Breakout

Yet the market is not focused on that yet. And the chart below indicates that GOOG could have a date with the $210 level soon. If it clears that hurdle, we could be looking at a new trading range, with that as its base. That would not only help GOOG and GOOGL shareholders, but with the stock being among the largest S&P 500 components, it could continue the pattern of mega caps leading in 2025.

GOOG daily chart. Source: Barchart.

The chart is what I’d refer to as stretched. That either means it is close to a near-term top, or it is simply extended, such that a pause and re-acceleration would be a very good sign for bulls.

Can META and GOOG Propel the S&P 500 Toward 7,000?

While my risk-manager persona sees every reason for META and GOOG to top here, I’ve seen enough of the mega-cap stock fever the past decade to never assume that high is too high. With Labor Day approaching, I think we’ll find out soon.