2023-12-13 07:10:00 ET

In the current investment landscape, the focus has shifted from the FANG stocks, and a new set of influential stocks, known as the Magnificent Seven Stocks, has emerged. These stocks include Alphabet GOOGL , Apple (AAPL), Amazon AMZN , Meta Platforms META , Microsoft MSFT , Nvidia NVDA and Tesla TSLA . These companies are considered the new leaders in the stock market.

There is a pureplay ETF called Roundhill Magnificent Seven ETF MAGS on this theme. The ETF has surged more than 30% this year. Individually, Apple, Alphabet and Microsoft are up more than 50% each, Meta shares are up about 165%, Amazon has gained 70%, Nvidia has skyrocketed about 233% and Tesla is up nearly 118% this year.

But there are three tech stocks — Vertiv VRT , IonQ IONQ and Applied Optoelectronics AAOI — that have beaten even the best of Magnificent Seven, i.e., Nvidia.

Inside the Dominance of Magnificent Seven

The Magnificent Seven stocks have a significant impact on the Nasdaq index, as they collectively account for a major portion of its total weighting. Despite recent fluctuations in the market, some of the Magnificent Seven Stocks, including Apple, Microsoft, Amazon, Google, Nvidia, and Meta, continue to exert a substantial impact on the tech-heavy Nasdaq index mainly due to their meaningful positions in the Artificial Intelligence (AI) space. The AI boom made them stars in 2023.

What About Other Tech Jewels?

Even in the narrow market breadth, some tech companies shined. With the Fed expected to go slow on its rate hike spree in 2024 (or even cut rates in late 2024), overall tech space should do well as the area thrives better in a low-rate environment.

Already, market breadth has continued to broaden, and smaller tech companies are likely to excel. Plus, the AI boom is ongoing, which is expected to push the space to another height next year.

Stock to Watch

Below, we highlight those winning tech stocks that trumped even Magnificent Seven in 2023. Since these stocks have a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), these winners have more room for growth going into 2024.

Applied Optoelectronics ( AAOI ) – Up 888.3% YTD

Applied Optoelectronics, Inc. designs, develops and manufactures advanced optical devices, packaged optical components, optical subsystems, laser transmitters and fiber optic transceivers. The Zacks Rank #3 company belongs to a top-ranked Zacks sector (top 31%).

IonQ IONQ – Up 268.8% YTD

IonQ Inc. provides a quantum system through the cloud on Amazon Braket, Microsoft Azure and Google Cloud, as well as through direct API access. IonQ Inc., formerly known as dMY Technology Group Inc. III., is based in COLLEGE PARK, Md. The Zacks Rank #2 company hails from a top-ranked Zacks industry (top 36%) and sector (top 31%).

Vertiv VRT – Up 271.7% YTD

Vertiv Holdings Co provides digital infrastructure and continuity solutions. It offers hardware, software, analytics and ongoing services. The Zacks Rank #1 company belongs to a top-ranked Zacks industry (top 21%) and sector (top 31%). Two out of three analysts upped their earnings estimates for the upcoming quarter over the past one month.