Recent U.S. economic data indicates a gradual easing of inflation, as evidenced by the Consumer Price Index (CPI) falling to 2.3% and core inflation resting at 2.8%. Additionally, the labor market remains robust, with 177,000 jobs added in April, keeping the unemployment rate steady at 4.2%. These factors suggest a potential stability; however, the Federal Reserve continues to exercise caution. Officials recognize that risks linger, particularly regarding inflation potentially stalling above target levels and the possibility of weakened labor market conditions.
Despite the lingering recession concerns, Morgan Stanley’s Global Strategy team remains optimistic about the economic landscape, suggesting that the global economy is still in an expansion phase, albeit with slowing growth rates. Their analysts have noted signs of progress, particularly in de-escalating trade tensions, and anticipate substantial monetary easing along with the advantages of deregulation. With this perspective, they have identified two top stock picks they believe will thrive in the market, particularly as we look toward 2025.
Atlassian Corporation (TEAM)
The first stock highlighted by Morgan Stanley is Atlassian Corporation. This international software company is renowned for its suite of collaboration tools designed to enhance productivity in the workplace. Founded in 2002, Atlassian has attracted over 300,000 customers, leveraging their flagship product Jira to establish a strong foothold in project management. The company’s expansive portfolio also includes Confluence, and today offers 19 different software programs, emphasizing project management, office teamwork, and coding efficiency.
Despite a dip in the stock price following the release of their fiscal 3Q25 results, which exceeded revenue and earnings forecasts but fell short of expectations for the upcoming quarter, Atlassian continues to show potential. For Q3, the company’s revenue reached $1.36 billion—an impressive 14% year-over-year increase—while their free cash flow also showed substantial growth, reaching $638 million.
Morgan Stanley analyst Keith Weiss remains bullish on Atlassian despite concerns among investors regarding the company’s ability to sustain its momentum toward achieving a 20% revenue compound annual growth rate (CAGR). Weiss underscores that the company’s management remains dedicated to long-term growth, even if that sometimes means short-term revenue fluctuations. He also emphasizes the ongoing innovation within Atlassian’s product offerings, stating, “Given the rapid pace of innovation expanding the portfolio… Atlassian screens as one of the Best Athletes in software.”
With a price target of $320, Weiss’s Overweight rating on TEAM suggests a one-year upside potential of 50%. The consensus rating from 21 analysts on TipRanks reflects strong support for the stock, with 16 buys, reinforcing the optimistic outlook for Atlassian.
Seagate Technology (STX)
The second stock on Morgan Stanley’s radar is Seagate Technology, an established leader in the hard disk drive market. This technology company, operating since the late 1970s, provides both internal and external hard drive solutions alongside solid-state disks (SSDs). As the demand for memory and storage escalates—across cloud computing, AI training, and high-performance analytics—Seagate is well-positioned to capitalize on these trends.
For fiscal Q3 2025, Seagate reported a remarkable 30% year-over-year revenue growth, reaching $2.16 billion, and successfully beat analyst forecasts. The company’s strong performance is underscored by an impressive $216 million in free cash flow during the quarter, with a dividend payment of 72 cents per share scheduled for July 8. This positions Seagate as a reliable investment option for those looking for consistent returns via dividend yield.
Analyst Erik Woodring highlights Seagate’s resilient position in the market due to increased demand for high-capacity computing. He notes that the company’s long-term financial model has exceeded expectations, signaling stronger revenue growth and improved operating margins moving forward. Woodring sees Seagate as an "underappreciated play" in the tech landscape and suggests that its leadership in the sector will contribute to sustained stock price appreciation.
With a price target of $140, Woodring’s Overweight rating for Seagate implies a 19% upside over the next year. The average consensus rating, based on recent reviews, leans moderately toward a buy, suggesting that investors could see modest gains in the near future.
In conclusion, while the economic landscape remains uncertain, Morgan Stanley’s top picks, Atlassian and Seagate, present compelling opportunities for investors looking toward 2025. Each company is well-positioned in their respective markets, showing strong growth potential through innovation and resilience. As the market continues to navigate through fluctuating economic indicators, these stocks could serve as strong additions to an investment portfolio. As always, investors should conduct their own research and consider multiple factors before making investment decisions.
