Tech stocks reigned supreme in 2024, with many investors favoring some of the so-called “Magnificent Seven” stocks of Alphabet , Amazon , Apple , Meta Platforms , Microsoft , Nvidia and Tesla , as well as other lesser-known companies. Principal Asset Management’s Martin Frandsen continues to see potential in the Magnificent Seven this year, but also sees value in other stocks within the sector. “There are several reasons to be optimistic for global tech stocks this year, as the combination of a benign economic outlook and continued strong innovation provide strong opportunities for tech companies globally,” the global equities portfolio manager told CNBC Pro . “Our expectation is that the Magnificent 7 will continue to live up to their name, but at the same time, we do not believe that they are created equally, nor do they come at the same price. For these reasons, we expect that there will likely be large differences in terms of the respective performances of these companies in 2025, meaning that investors need to be selective within the Mag 7,” he added. Frandsen sees “a wealth of attractive technology company opportunities outside the Mag 7 that are sometimes overlooked.” These stocks, he said, span areas such as artificial intelligence infrastructure, chips and data centers. Echoing Frandsen’s comments, Michele Schneider, chief market strategist at Marketgauge.com, says she sees “significant opportunities in high-growth sectors such as EVs, robotics, health care (including diet drugs), and AI and Quantum computing,” which she says are “poised to offer substantial returns for strategic reallocations of undervalued assets” this year. Here are three tech stocks she is betting on this year. Kratos Defense and Security Systems Among Schneider’s top picks is Kratos Defense and Security Systems , a defense and space manufacturing company based in the United States. The company is known for its “development and production of high-performance drones designed for military and defense applications,” the strategist said. Shares in Kratos have gained about 55% in the last 12 months. Of the 13 analysts covering the stock, eight have a buy or overweight rating while the remaining five have a hold call, according to FactSet data. Their average price target is $30.17, giving the stock 2.7% upside potential. International Business Machines Quantum computing leader International Business Machines , or IBM, is another company on Schneider’s radar this year, thanks to what she calls “significant strides” it has made in “developing both the hardware (quantum processors) and software (tools like Qiskit) necessary for quantum computing applications.” “IBM is working to bring quantum computing into mainstream use,” she added. Over the last 12 months, shares in IBM have risen around 32.5%. Analysts are divided on the stock, with just 43% giving it a buy or overweight rating, according to FactSet data. Their average price target of $229.69 gives it upside potential of 4.5%. Salesforce As for the AI space, Schneider is betting on Salesforce . She describes the company as being “deeply involved in AI,” having integrated the technology “throughout its platform to enhance customer relationship management, boost productivity, automate tasks, and provide predictive insights.” Features such as Salesforce Einstein, a generative AI tool used for customer relationship management, as well as data visualization platform Tableau and software integration tool MuleSoft, are all “powerful tools for businesses looking to leverage artificial intelligence in sales, marketing, and service operations,” she added. Schneider noted that the stock has “the potential to move to $500, depending on market conditions.” Shares in Salesforce have gained nearly 17% in the last 12 months. Of the 55 analysts covering the stock, 42 have a buy or overweight rating, 11 have a hold rating while the remaining two have a sell or underweight call. The analysts’ average price target of $401.36 gives it 26.3% upside potential.
