Tech stocks had a very strong 2013, with names like Netflix (NFLX) and Facebook (FB) leading the charge higher.

But as the Federal Reserve takes its foot off the stimulus pedal and the economy looks to ramp up growth, what tech names will sparkle in 2014?

These are the four tech stocks Jefferies predicts will do the best next year: Activision Blizzard (ATVI), Intel (INTC), Micron (MU) and Microsoft (MSFT).

  • 1Activision Blizzard – $23 price target

    REUTERS

    Newly-independent Activision is known for its blockbuster video-game titles “World of Warcraft” and “Call of Duty.” The latter game shattered records earlier this year when it generated $1 billion of sales in just a one day.

    “Gamers continue to overlook anything but the biggest, baddest titles” and Activision has a “small portfolio of mega-hit games,” Jefferies analyst Brian Pitz wrote to clients this week. He set a price target of $23 on Santa Monica, Calif.-based Activision.

    One of the biggest catalysts behind the bullish bet on Activision is the company’s $8.2 billion move to gain independence from France’s Vivendi. Pitz believes Activision has set conservative guidance around the transaction.

    At the same time, Activision should stand to gain from the first console cycle in seven years as Sony (SNE) and Microsoft have rolled out their PlayStation 4 and Xbox One devices.

    Pitz also pointed out a little-noticed policy change in “World of Warcraft” that allows gamers to pay to boost their characters to a required level to play the new game. He said the move removes an obstacle that turned off subscribers.

    If sales of next-generation consoles and Activision beat forecasts, Jefferies sees the stock climbing to as high as $25. The firm also set a downside target of $19 if there are console supply constraints and “Call of Duty” fatigue.

  • 2Intel - $32 price target

    Reuters

    As the world’s largest chip maker, Intel continues to show off its ability to innovate better than competitors.

    In fact, Jefferies analyst Mark Lipacis believes Intel is one of just two semiconductor makers that is “able to sustain a leading edge manufacturing capability in the Moore Stress era.” Moore’s Law, coined by an Intel co-founder, says the number of transistors that fit on an integrated circuit doubles roughly every two years.

    This innovation has allowed Intel to drive transistor costs down, while mobile rival Taiwan Semiconductor Manufacturing Co. (TSM) is bracing for costs to rise.

    “As a result, we expect Intel to have advantages in cost, performance, and power for the first time in mobile in 2014, which should translate to share gains in tablets and handsets,” Lipacis wrote to clients.

    Jefferies notes that Intel shelled out around $60 billion on research and development and capital expenditures between 2011 and 2013, roughly doubling the spending of TSMC.

    If Intel’s tablet market share ramps up quicker than expected and other factors go the company’s way, Jefferies believes the stock could rise to $38. The downside scenario’s price target of just $17 would come into play if tablet cannibalization of PC accelerates and Intel’s gross margins compress.

  • 3Micron - $30 price target

    Reuters

    The inclusion of this Flash memory maker on the Jefferies list is noteworthy given Micron’s incredible surge in 2013. The stock is up more than 230%, making it one of the best performers on the Nasdaq 100 year-to-date.

    But Jefferies believes the gross margin expansion that Micron has enjoyed over the past 12 months is “permanent, not cyclical, in nature.” Analyst Sundeep Bajikar sees the company’s non-GAAP gross margins surging by 2,000 basis points over the next 12 to 18 months after jumping 1,400 basis points through the first three quarters of 2013.

    Jefferies cited structural changes in the Dynamic random-access memory, or DRAM, market which has consolidated from 24 companies in 1987 to just three that have over 90% of the market now.

    The firm also cited Micron’s $2.5 billion acquisition of Elpida, which should help contribute to the company’s margin expansion.

    If PC unit demand recovers, Jefferies sees Micron’s stock hitting $35, while the downside scenario calls for the Elipida effects being delayed and a price target of just $14.

  • 4Microsoft - $42 price target

    reuters

    After frustrating shareholders for years with subpar gains, Mr. Softee had a stellar 2013 with a 38% rally. The tech titan has also undergone a transformation by announcing the departure of longtime CEO Steve Ballmer, streamlining its organization through a sweeping reorganization and acquiring the devices division from Nokia (NOK) for $7.2 billion.

    Jefferies analyst Ross MacMillan believes the reorganization “helps to highlight the value in the commercial business,” which sports higher revenue and gross margins than the consumer side of the business. For example, the firm notes that about 85% of the value of Office resides on the commercial side.

    MacMillan also cited the move to cloud-based Office 365, which he said will allow Microsoft lower costs for consumers and small businesses and drive recurring revenue.

    “MS Office continues to be one of the stickiest apps in the market and serves as the personal productivity standard for enterprises and consumers,” MacMillan wrote.

    Jefferies set an upside price target of $48 on Microsoft and said this is attainable if PC market share improves and Windows gains more traction in the tablet and smartphone market.

    On the downside, Microsoft’s stock could drop to $30 if its Surface tablet struggles and Windows 8 adoption misses the mark.

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