21 Feb Top 2 ‘Magnificent Seven’ alternatives to own in 2025
“Magnificent Seven” were the standout performers last year but a Piper Sandler analyst is not entirely convinced they’re positioned for a repeat telecast in 2025.
Other than Meta Platforms Inc, none of them has significantly outperformed the benchmark S&P 500 index year-to-date. In fact, four of those mega-cap tech stocks are actually in the red.
Therefore, the firm’s senior analyst Michael Kantrowitz recommends bailing on the “Magnificent Seven” in 2025.
He has a list of other large-cap tech stocks instead that he expects will outperform this year.
Two names that top his list are Qualcomm and Fortinet.
Qualcomm Inc (NASDAQ: QCOM)
Qualcomm stock is already outperforming the benchmark index with a 15% year-to-date gain.
But it’s not too late to invest in QCOM yet, according to the Piper Sandler analyst. Kantrowitz expects the semiconductor giant to extend its gains through the end of 2025.
Part of his optimism about Qualcomm shares is based on the company’s recent earnings release.
The multinational topped Street estimates on the top and bottom lines in its recently concluded quarter on strong smartphone demand.
The company also provided stronger-than-expected guidance for its first quarter, projecting revenue of $10.6 billion and earnings of $2.80 per share.
This exceeded analyst estimates of $10.34 billion in revenue and $2.69 per share in earnings.
Piper Sandler sees Qualcomm stock as a great AI play as well. Note that Statista forecasts the artificial intelligence market to grow at a compound annualised rate of more than 27% through the end of this decade.
Finally, QCOM shares currently pay a dividend yield of 1.94% which makes them all the more attractive to own at writing.
Fortinet Inc (NASDAQ: FTNT)
Another top name that Piper Sandler thinks is a better pick than “Magnificent Seven” for 2025 is the California-based cybersecurity company Fortinet.
Its shares have already rallied more than 20% this year – far more than the S&P 500 index, and are poised to unlock further upside in the coming months, according to Kantrowitz.
The analyst is bullish on FTNT as it’s a leader in Unified Secure Access Service Edge (SASE) and Security Operations markets.
Its strategy of investing in high-growth areas and strengthening its position in secure networking is well-received by customers and investors alike.
Last week, the Nasdaq-listed firm reported better-than-expected results for its fiscal Q4.
Fortinet provided revenue guidance in the range of $6.65 billion to $6.85 billion, surpassing analyst expectations of $6.62 billion.
Piper Sandler currently has a $135 price target on FTNT shares that indicates potential for another 20% upside from current levels.
On the downside, however, Fortinet stock does not currently pay a dividend. So, it’s not a suitable pick for income investors.
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