Forget the Magnificent 7, buy these high-quality alternatives instead, Piper Sandler says

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Forget the Magnificent 7, buy these high-quality alternatives instead, Piper Sandler says

While the “Magnificent Seven” helped lead the market higher in 2024, accounting for more than half of the S & P 500’s 23.3% gain, there are some stocks investors should eye for 2025 instead, according to Piper Sandler. “Even though the Magnificent 7 are some of the most successful companies in the world, they don’t outperform every single year,” Piper analyst Michael Kantrowitz wrote in a Monday note. “So far in 2025, only META is significantly leading the S & P 500 and 4 of the Mag 7 stocks are in the red YTD.” Meta Platform shares have risen more than 22% year to date. The S & P 500 has gained more than 4% in the same *******. “Many investors associate the Mag 7 with the growth trade as these stocks have certainly played a significant role in the outperformance of growth indices in recent years,” Kantrowitz wrote. “Nonetheless, growth indices and growth factors have managed to be leaders in 2025 even without strength across the Mag 7.” Taking that into account, Piper highlights some large-cap technology alternatives to the Magnificent Seven. The firm screened for quality cyclical names, specifically those with high cash flow return on investment, correlation to PMI, earnings momentum and free cash flow yield. Here are some of the stocks that appeared. Shares of chipmaker Qualcomm have seen meaningful gains over the past year, climbing almost 14% in the past 12 months. In 2025’s young year, the stock has already outperformed the S & P 500 with a year-to-date gain of around 13% – more than three times that of the index. Some analysts are worried about the company’s growth trajectory moving forward, even with its strong forecast for the current quarter . For instance, Morgan Stanley analyst Joseph Moore said in a note following Qualcomm’s latest quarterly results that the rise of ******** telecommunications and smartphone giant Huawei could serve as a headwind for Qualcomm. That company recently saw a 22% increase in revenue in 2024 compared to the year before. That said, more than half of the 41 analysts covering it on Wall Street are bullish on the name for the months ahead, as 23 have a strong buy or buy rating, according to LSEG. They also see sizable gains from here, as its consensus price target of around $201 implies nearly 16% upside from Tuesday’s close. In software, Fortinet shares – which hit a new 52-week high during Tuesday’s session – have seen a nearly 67% gain over the past 12 months, almost three times that of the S & P 500’s in that *******. Additionally, its year-to-date gain of about 21% is more than five times that of the index’s gains in the *******. FTNT 1Y mountain FTNT, 1-year Earlier this month, the company’s fourth-quarter results topped the Street’s estimates, and management issued strong full-year revenue guidance for 2025. The stock is hold-rated among analysts, however. To be sure, 16 out of 42 total analysts have a strong buy or buy rating, while 25 analysts have taken a neutral stance with a hold rating. Moreover, Hewlett Packard Enterprise’s nearly 46% gain over the last year has also outperformed the broader market. Notably, eight out of 15 analysts have a strong buy or buy rating, and its around $24 consensus target reflects more than 11% upside potential.

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