Hi. This is Matt Brundage here at Bridgehouse, and I recently had a chance to speak with Paul Greene, portfolio manager for the T. Rowe Price U.S. Blue Chip Growth Fund. I asked Paul to share his thoughts on the Mag 7, given the run that they've had, and if there are certain names in the group that he prefers over others. Here's what Paul had to say. These stocks often get talked about as a group. You know, it used to be the moniker was FAANG. Now it's Mag 7. But they often get grouped together.
I think it's very important to remember that they are different companies and they have different drivers. And we actually have started to see more bifurcation in terms of the performance of these companies over the last couple years. So maybe taking them in buckets, I think if you look at companies like Apple and Microsoft, pretty steady compounding, in their earnings over the last several years. And for the most part, the stocks kind of just follow that earnings compounding.
And, when you went through a tough year like 2022, those stocks actually held up relatively well. I'd say where we sit today, we still feel pretty good about the outlook of these companies and their ability to compound earnings. And valuations, I would say, are okay. I wouldn't say they're screaming cheap. I also don't think they're so expensive that valuation's gonna get in our way of being able to just compound in the stocks alongside earnings.
A second bucket would be names like I just mentioned, the Googles, Amazons, and Meta. These are companies that were really beaten up going back to late '21 and and and into 2022. And while they have been very strong stocks in the last 18 months, I think a lot of that has just been sort of recapturing the drawdowns that we saw in the 18 months prior, which in our view, and I think now the market agrees with us, was was overly negative.
Meanwhile, over that last three years, these companies have been growing earnings pretty robustly and in some cases, I think, are even better positioned today than they were three years ago. And yet the stocks, I think, while they're up, I'd say a lot of it has just been recaptured of the drawdown and the stocks have seen their multiples actually compress. I mean, if you look at Google today or Meta they're only marginally more expensive on a PE basis than than the broader S&P 500.
And that's despite, I think, really strong, compelling growth outlook. And then, of course, you have NVIDIA and Tesla which are sort of on different ends of the spectrum. NVIDIA has seen monumental growth in its stock but even more monumental growth in its earnings. This makes this stock a little more difficult in the sense that, it is it is more cyclical than the other names.
And the company is, when we when we think about what we're really good at, I think where we have an advantage is looking out three, four, and five years and sort of understanding the the fundamental drivers of of value creation over time. And that's something I think we're pretty well equipped at predicting and are pretty good at. Calling the cycle is actually very difficult.
So with NVIDIA, when we look out over three, four, and five years, we feel quite optimistic about the company's ability to continue to grow very strongly. But, it's clearly going to be the case that we're going to see, or we're likely to see, an inventory cycle sometime between now and then. So I think that's something we have to be prepared for. It's something that we want to be tactical around to the extent we can, but we also, just overall, size our position with that in mind.
And then Tesla has been sort of the other end of the spectrum. It's a company that I think is unique and special in many ways, but operates also in a very cyclical industry. The automotive end market has some headwinds, and they have some headwinds on top of that just in terms of being sort of at the end of a product cycle, and yet still too early for the next product cycle to kick in and carry the water for them. So, that's one we've had less exposure to.
But I'd say, in general, we still feel pretty good about the group collectively.