Tech’s Next Leaders: Stocks Poised to Surpass ‘Magnificent Seven’

  • Excitement around generative artificial intelligence (AI) drives tech sector growth
  • The “Magnificent Seven” tech stocks dominate U.S. equity markets in 2023
  • Smaller tech stocks struggle amid weaker spending and higher rates
  • Global IT spending expected to double in 2024, creating new opportunities
  • Investors advised to focus on software, data and security, and AI applications
  • Potential tech leaders to watch include AMD, Micron Technology, MercadoLibre, and HubSpot


Many stock investors feared last year that companies with a disruptive impact on technology would continue to underperform, due to higher interest rates and a weaker macroeconomic backdrop. However, the tech sector proved them wrong, with generative artificial intelligence (AI) taking center stage and driving significant wealth creation in 2023. Despite the dominance of the “Magnificent Seven” tech stocks, smaller tech companies faced challenges due to weaker spending and pressure on multiples from higher rates.

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Global IT Spending Set to Double in 2024

As the end of the rate-hiking cycle approaches and the spending environment improves, the tech sector is expected to experience a leadership change. The growth rate for worldwide IT spending could more than double in 2024, creating new opportunities for investors. This projected growth opens doors for companies across industries and applications, including next-generation data storage, cybersecurity, and software-development tools.

Focus on Software, Data, and AI Applications

Valuations in software are particularly attractive, with a slim spread between the fastest- and slowest-growing companies. Investors seeking exposure to AI opportunities should consider three specific areas: enablers of AI (cloud providers and semiconductor manufacturers), data and security (software companies that handle and secure vast amounts of data for AI models), and AI applications (software and enterprises across various sectors that leverage AI broadly).

Potential Tech Leaders to Watch

While the “Magnificent Seven” tech stocks have had their time in the spotlight, it’s important for investors to look beyond them for new growth opportunities. Some potential tech leaders to watch in 2024 include:

  • AMD (Advanced Micro Devices): With its new MI300 chip, AMD is well-positioned to gain GPU market share in 2024 and benefit from the increasing demand for AI processing.
  • Micron Technology Inc.: As AI processing requires more onboard memory, Micron is an emerging leader in high bandwidth memory (HBM), which is expected to drive meaningful acceleration in fundamentals in 2024.
  • MercadoLibre: Often referred to as the “” of Latin America, MercadoLibre is expected to continue gaining market share in e-commerce and digital payments.
  • HubSpot: A leading provider of sales and marketing tools for SMBs, HubSpot is well-positioned to benefit from the recovery in spending in 2024, thanks to its new generation of AI features and functions.


As the tech sector continues to evolve, investors should consider dedicated allocations to tech in order to capitalize on the industry’s disruption and potential wealth creation opportunities. While the “Magnificent Seven” tech stocks have been the primary drivers of the market, the growth of generative AI and the improving spending environment are likely to shift market leadership. By focusing on software, data, and AI applications, investors can uncover attractive opportunities in the most disruptive parts of the market at reasonable prices.

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