Morgan Stanley Says These 2 Stocks Are Top Picks for 2025

Recent U.S. economic data suggests that inflation is gradually easing toward the Federal Reserve’s 2% target, with the headline CPI at 2.3% and core inflation at 2.8%. Meanwhile, the labor market remains resilient, adding 177,000 jobs in April and holding the unemployment rate steady at 4.2%.

However, despite these positive indicators, the Fed remains cautious. Officials have noted that while recent trends are promising, risks still linger — particularly the possibility that inflation could stall above target or that labor market conditions could weaken in the months ahead, especially under the weight of potential trade disruptions. As such, recession concerns haven’t been fully laid to rest.

Morgan Stanley’s Global Strategy team, however, has taken a deep look into the current state of the world’s economy, and they have come down on the side of the bulls. In their view, the global economy remains sound, at least for the near-term.

“Despite unprecedented policy uncertainty, the global economy is still in expansion mode, albeit with slowing growth. Off-ramps for de-escalation of trade tensions exist and we expect that tariffs will not end at the extreme levels in the aftermath of Liberation Day. Substantial monetary easing is ahead along with the benefits of deregulation… TINA – ‘there is no alternative’ – remains a theme for now. USD assets are – if not simply the best, nor better than all the rest – THE market which will attract bulk of flows,” the strategists wrote.

The stock analysts at Morgan Stanley are running with this, and pointing out the ‘Top Pick’ stocks for the rest of 2025. According to the TipRanks data, both are also rated as Buys by the analyst consensus. Let’s dig in and see what sets these picks apart in today’s ever-shifting market landscape.

Atlassian Corporation (TEAM)

The first Morgan Stanley pick we’ll look at is Atlassian, the international software company that has developed a set of collaboration tools designed for the online office. Atlassian’s software packages enable smooth and efficient market, project, and product management, purpose-built to enhance collaboration and creativity in the workplace. The company was founded in 2002, and today boasts more than 300,000 customers.

Atlassian’s first product was Jira, its flagship project management tool. The company expanded based on Jira’s success, and launched the collaboration platform Confluence in 2004. Today, Atlassian’s product line-up includes 19 software programs, focusing on everything from office teamwork and collaboration to coding and online security. The company’s software products are designed as cloud-native, and Atlassian arranges cloud hosting through AWS.

TEAM shares took a hit early this month, when Atlassian released its fiscal 3Q25 results (March quarter). The company beat the forecast for both revenue and earnings – but its 4Q revenue guidance fell just short of the consensus estimate. Atlassian published top-line guidance for its fourth quarter in the range between $1.35 billion and $1.36 billion; the midpoint of $1.355 billion came below the analysts’ expectation of $1.36 billion.

The quarterly results themselves were considered sound. The 3Q top-line of $1.36 billion was up 14% year-over-year and $10 million better than the estimates; the bottom-line, a non-GAAP EPS of 97 cents was up 8 cents from 3Q24 and beat the forecast by 4 cents. Atlassian’s free cash flow in Q3 was also strong, and grew 15% year-over-year to reach $638 million.

For Morgan Stanley’s Keith Weiss, an analyst ranked in the top 2% of Street stock experts, Atlassian continues to present a bullish case, despite niggling investor concerns.

“While the F3Q print left many investors questioning Atlassian’s ability to execute against its +20% revenue CAGR target, we view the underlying trends as stable/healthy and agree with management’s confidence in the durability of 20%+ growth. We view the results as indicative of this management team’s commitment to long-term durability of growth, which at times comes the expense of near-term growth maximization. Given the rapid pace of innovation expanding the portfolio, strong value proposition enabling multiple growth levers, and the potential for further margin expansion, Atlassian screens as one of the Best Athletes in software, a positioning not well reflected in current valuation,” the 5-star analyst opined.

“At 28x CY26 FCF (1.1x growth-adj), current valuation presents attractive entry point for LT investors. Reiterate as Top Pick,” the analyst summed up.

To this end, Weiss’s Overweight (i.e., Buy) rating on TEAM comes with a $320 price target that implies a one-year upside potential of 50%. (To watch Weiss’s track record, click here)

Overall, TEAM gets a Strong Buy consensus rating from the Street, based on 21 recent analyst reviews that include 16 Buy recommendations and 5 Holds. The shares are priced at $213.03 and their $267.70 average target price points toward a gain of 25.5% in the next 12 months. (See TEAM stock forecast)

Seagate Technology (STX)

The next stock we’ll look at is a technology company that provides memory hardware: Seagate Technology, which has been around since the late ‘70s and today is a leader in the hard disk market. The company provides both internal and external hard drive technology, and is well-known as a provider of solid-state disks (SSDs). Seagate’s product lines include personal storage; cloud, edge, and data center memory; network attached storage; high-end gaming hard drives and SSDs; and hard drives for video and analytics.

All computing sectors require memory, making Seagate’s specialty an essential product. The company’s products have found applications everywhere, from data migration to AI/ML training to analytics to high performance computing, in areas including public and private clouds, multicloud environments, and edge computing. Seagate’s leading product, its Mozaic 3+ technology platform, powers the company’s Exos hard drive family, which offers as much as 36TB of capacity.

Seagate’s success can be measured in dollar terms — the company boasts a market cap of nearly $25 billion, and in its fiscal year 2024, which ended on June 27, 2024, the company generated $6.55 billion in revenues.

In the company’s last quarterly release, which covered fiscal 3Q25 (ended on March 28), Seagate reported a top line of $2.16 billion. This represented an impressive 30% year-over-year gain, and beat the forecast by $30 million. At the bottom line, Seagate reported a non-GAAP EPS of $1.90, 16 cents per share ahead of the estimates. During the quarter, Seagate realized $216 million in free cash flow and returned $152 million to shareholders through its regular dividend payment. The next dividend, of 72 cents per common share, is scheduled for payment on July 8; the company’s dividend annualizes to $2.88 per share and gives a forward yield of 2.55%.

Erik Woodring, in his coverage of Seagate for Morgan Stanley, notes that the company is beating expectations on revenue growth and that today’s tech environment, with its emphasis on demand for high-capacity computing and storage, is likely to remain supportive for the company.

“Mgmt’s long-term financial model surpassed our expectations, guiding to stronger revenue growth, higher operating margins, and earlier share buybacks than we had anticipated… The inflection in compute will drive exponential growth in storage demand, and we see STX as a still underappreciated play on this theme at just 7.5x our peak EPS. Tech leadership, premium margins, robust FCF generation, and strong cap returns support EPS upside and multiple re-rating from here…  STX is the Top Pick in our coverage,” Woodring noted.

Being a ‘Top Pick,’ Seagate gets an Overweight (i.e., Buy) rating from Woodring, whose $140 price target on the stock implies it will gain 19% on the one-year horizon. (To watch Woodring’s track record, click here)

Seagate’s Moderate Buy consensus rating is derived from 15 analyst reviews that split 10 to 5 in favor of Buy over Hold. The stock is selling for $117.34 and has an average price target of $121.79, suggesting a modest 4% upside in the next 12 months. (See STX stock forecast)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.