It’s fine to stay heavily invested in some of the mega-cap tech titans that are now quite well represented at the top of popular indices such as the Nasdaq 100 or even the S&P 500. That said, I do think that it’s worth looking beyond the Magnificent Seven, even if they are destined to stay magnificent for the long haul.
The Mag Seven stocks are great. But there’s reason to invest in names outside the basket of magnificent titans
While their massive market caps (the average name is now measured in trillions, rather than billions) might leave less in the way of appreciation relative to the much-smaller up-and-comers (think the companies with market caps south of $100-150 billion), it’s a mistake to think that the titans can’t continue to do well as the we move further into the AI age. In many ways, the mega-cap tech titans have made the most of their economies of scale.
And while anti-trust concerns could present themselves at some point down the road, I do think they’re less of an issue, especially given the pro-tech Trump administration, as well as what’s on the line as U.S. tech seeks to stay ahead of China in an epic AI race that some pundits may describe as an arms war of sorts.
The Magnificent Seven will do well, but I do think that some of the emerging names are worth keeping on your radar if you’re a younger investor who’s willing to take on more risk for a shot at being on the right side of a historic mover. Of course, it’s hard to tell which non-Mag Seven innovators will rise to become that next big thing.
But if you’ve got a strong stomach, the following emerging stars, I think, show tremendous potential and might be able to give your Mag Seven-heavy portfolio a bit of a jolt. As the AI trade comes in a bit, I think excess volatility in the names could open a window of opportunity for brave dip-buyers who still believe that tech will benefit far more than the heavyweights atop the market.
Snowflake
Snowflake (NYSE:SNOW) shares are on the retreat, now down over 7% from recent highs, thanks in part to a fairly mild pullback in AI names. While the AI cloud company’s shares might be a tad harder to value after a 40% run in just six months, I still think the magnitude of growth might still be underestimated, especially as AI adoption looks to pick up across the enterprise. What’s even tougher is that investors might struggle to truly understand what the firm actually does since it’s less of a consumer-facing play and more of one that’s tailored to enterprise use cases.
With enterprise-grade AI and a powerful platform that could enjoy an AI-induced growth surge, I’d watch the firm very closely, especially as the company continues pulling the curtain on unique and profound innovators whose potential, I believe, most retail investors can’t even begin to fathom. With significant momentum and some powerful agentic AI innovations necessary to fuel the revolution, Snowflake is a $87 billion firm that’s difficult to ignore.
Datadog
Datadog (NASDAQ:DDOG) is another rising star in tech that’s difficult for investors to understand. Undoubtedly, observability platforms can be tricky to gain a grasp of. As the era of agents arrives, though, I think the value Datadog’s platform, I think, will be well recognized by many. When it comes to AI and especially agents, the output from various inputs is highly uncertain. As a result of the “black box” that is a complicated AI model, you’re going to need close monitoring. AI to monitor other AIs, I think, will be in high demand to ensure safety, security, optimization, and all sorts.
So, how do you really understand how an AI agent works in the field? You observe and monitor. And that’s why I think Datadog shares could be well worth their premium price of admission. The stock is up over 57% in six months and seems to be cooling after the latest AI pullback despite a strong third quarter and enthusiasm about the near future.
Will Datadog stock be a choppy ride? That’s highly likely, but if you want promising hyper-growth prospects, I think the $65 billion company is worth watching going into 2026.