Amazon (AMZN) will be the top performing mega-cap in 2024 as the company launches an "all-out offensive to catch-up in AI", according to Jefferies Senior Analyst Brent Thill.

"Amazon's stock works when they're in 'harvest mode' and we think they'll continue to harvest the investments they put in during the pandemic," Thill told Yahoo Finance Live.

Thill is also bullish on Pinterest (PINS) and Snap (SNAP), naming Pinterest his top performing SMID-cap internet pick for the year while predicting Snap will be the "comeback story of 2024."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Angel Smith.

Video Transcript

BRAD SMITH: The Magnificent Seven, we've been tracking this closely. Mag Seven led last year's rally, driving the tech-heavy NASDAQ higher by over 40% in 2023. And Jefferies is out with some more predictions to come for big tech names in 2024. Brent Thill, Jefferies senior analyst, joins us now for more on this.

Hey, Brent, great to see you and a happy new year to you here. Let's kick things off, first and foremost, with the perhaps permeation of some of that momentum that we had seen during 2023 for the Mag Seven into 2024. What are your expectations there?

BRENT THILL: I think '24 is going to be a good year, but I don't think it's going to be as good as '23. We think the magnitude of upside for the large cap names won't be as great. It'll broaden and it'll go to more small and mid. As we see rates come lower, hopefully, the economy finds a softer landing. And that should be good for small and mid caps.

And as such, our team upgraded Upwork or highlighting Pins. There's a number of other stories across technology that our tech group is focused on. So we don't believe it's going to be concentrated as much as we saw last year in the top names, but it'll broaden out. But we do think that the backdrop of demand looks solid for advertising for the other subsectors that we cover.

So we think that-- again, I think just the big change is the beginning of last year, no one really knew what was happening with rates going higher and ultimate-- and demand, everything kind of froze at the beginning of the year, and then unfroze as we went. This year, we go into a everything feels good, things are moving more normal year. And stocks have reflected a lot of that already.

And so that's the only concern we have is the magnitude of some of these moves when you look at the move that Meta had, the move that numerous tech names have had is our only concern when things are kind of this easy, that's when you start to say, well, perhaps, there's going to be a pullback at some point. And we get an opportunity to get more-- to get more energized on that pullback.

SEANA SMITH: Well, Brent, let's talk about your top predictions. You're at least starting with the large caps-- I know you're seeing opportunity elsewhere, but within the large cap space, you've been bullish on Amazon for quite some time. You think it still has legs to go higher here. What's the driving catalyst that you see for this stock, and why it's better positioned among some of the other players within the space?

BRENT THILL: Yeah, last year, we predicted Meta as our top pick. And we're proud of that pick. That worked really well. This year-- every year, we switch it up. So you typically don't see the same name outperform in the next year. So Meta was last year, Amazon's our pick this year based on building momentum in AWS, their cloud business, the advertising business, as well as continued cost discipline in their core retail business.

And Amazon stock works when they're in harvest mode not invest mode. And we think they're continuing to harvest the investments they put in the pandemic to get goods to you and I at a very rapid rate. So we are encouraged by the increasing margin structure. AWS will go from low teens to mid to high teen growth. The advertising business remains in a really good spot.

So we continue to like Amazon in the large cap side. We still like Meta, but just believe the magnitude of the run, based on what happened last year, a lot of that's already embedded in the fundamentals.