The largest US stocks, known as the “Magnificent 7,” have enjoyed a phenomenal run over the past two years, in part thanks to the buildout of AI infrastructure. But Sung Cho, co-head of US Fundamental Equity in Goldman Sachs Asset Management, believes the tech trade will broaden out in 2025.
Cho says the buildout of AI might significantly benefit data and security companies, as well as software companies that successfully integrate AI into their existing product set. He adds that as the Fed likely continues cutting rates, smaller tech companies – which saw their multiples contract significantly as rates rose – might find the macro backdrop much more favorable.
“We think 2025 will be another strong year for tech,” Cho says. “But we think that smaller tech companies could lead the way.”
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