Market Insights

Technology is the worst-performing sector this year. A lot of the weakness is at the top, but some smaller names are breaking out.

Apple (AAPL), Nvidia (NVDA) and Microsoft (MSFT) are the three biggest technology stocks, accounting for more than 40 percent of the sector’s weighting. They’ve declined an average 7 percent so far this year, according to TradeStation data. That contrasts with an average gain of 4 percent for the other 66 stocks in the group.

Each of the “Big Three” has faced challenges:

• AAPL has lost market share in its key Chinese market and is showing only tepid signs of benefiting from an iPhone upgrade cycle.
• MSFT’s key Azure business missed growth estimates last quarter. It had already guided the number down in October and struggled with slowness in July.
• NVDA plunged on January 27 after China’s DeepSeek AI model caused investors to question optimistic assumptions about demand for AI hardware over the long run.

These issues may impact the main growth drivers of all three companies. They’re also the biggest in the world by market capitalization, which may suggest they’re widely owned. Are investors lightening those positions and looking for opportunities in other companies? Price action may suggest they are.

Here are some of the recent outperformers, according to TradeStation Data.

Palantir Technologies (PLTR), daily chart, with select patterns and indicators.

Palantir, Atlassian

Palantir (PLTR) jumped to a new all-time high on Tuesday after earnings, revenue and guidance beat estimates. The software company got started with government customers focused on national security and counterterrorism. It’s achieving its recent growth by expanding into the larger corporate enterprise market.

Atlassian (TEAM) jumped to a three-year high last Friday after earnings and revenue beat estimates. The AI boom is fueling demand for its Jira project-management software and its AI-powered assistant Rovo.

CrowdStrike, Fortinet

Next come a pair of cybersecurity firms.

CrowdStrike (CRWD) plunged in July after an update caused widespread outages, but has clawed back since. It jumped to a new record high last week after announcing its Falcon platform achieved a perfect score on the SE Labs Enterprise Advanced Security Ransomware Test.

RadarScreen® showing year-to-date (YTD) performances of select symbols.

Fortinet (FTNT) hit a new all-time high last week after rallying on its last two earnings reports. Its next set of numbers is due Thursday afternoon.

KeySight, Cognizant

KeySight Technologies (KEYS), whose equipment is used to test and optimize communication networks, is the only hardware company in this article. It issued better-than-expected earnings, revenue and guidance in November, partially because of AI-related spending. The stock paused in December and early January, but ended last week at its highest level in almost three years. KEYS reports earnings after the closing bell on February 25.

Cognizant Technology Solutions (CTSH) is an IT-outsourcing company with major Indian operations. The stock rallied on strong results in late October followed by a period of chopping. It closed Tuesday at the highest level since May 2022. CTSH has announced several AI products and projects, including expanded contracts for major companies like McDonald’s (MCD) and Gilead Sciences (GILD).

In conclusion, some strategists have warned about overconcentration in megacap growth stocks. The early weeks of 2025 have shown apparent weakness in the biggest names despite strength in the broader technology sector. Given the potential for other names to gain attention as the year progresses, some investors may start following smaller companies. (That’s why we focused on short-term performance and potential near-term catalysts like AI spending.) Keep reading Market Insights and watching Market Trends for more changes happening in the New Year.