Here are 3 top tech-stock picks that can outperform without help from the AI trade, according to a Wall Street analyst

The AI trade has been the stock market’s rocket fuel in the last few years, but talk of a bubble and a potential broadening of the rally has investors looking for alternatives.

The AI trade has been volatile in the last few weeks, even amid stellar earnings from the top tech names, and while DA Davidson analyst Gil Luria says he’s bullish on AI as a whole, he also sees strong potential for several stocks outside the core AI theme.

Luria flagged three smaller tech stocks that he sees as overlooked and often overshadowed by their Magnificent Seven peers, all of which operate in the AI infrastructure and software space and are benefiting from investors’ endless enthusiasm for the transformative potential of AI.

“The reason we have focused on infrastructure software stocks this year is that they are the most clear beneficiaries from the rise of AI usage, without having much of the perceived risks of application software companies,” Luria told Business Insider.

The companies Luria pointed to outside of the core AI trade are:

Snowflake: +62% year-to-date.

Datadog: +11% year-to-date.

JFrog: +113% year-to-date.

While all three have performed well over the past year, little-known JFrog, a Silicon Valley-based software firm, has outpaced the other tech stocks Luria named, as well as all members of the Magnificent 7 year to date.

Luria’s bullish thesis centers on his view that software infrastructure will benefit regardless of how the AI market develops.

“Regardless of how enterprise customers build AI tools, or which AI tools they build, they will all need more data lakehouse capacity (SNOW), more applications and infrastructure to observe (DDOG) and much more binary code to manage (FROG),” he stated.

Luria emphasized that he thinks the AI trade isn’t going away, and will continue to spur growth across industries. Yet, he thinks that for Snowflake, Datadog, and JFrog, the clear edge lies in the fact that larger companies will always need their services to continue scaling their AI tools.

“These three companies are already great, but the more AI, the better they do,” Luria said.