Rising interest rates and soaring debt costs at big companies is likely to favor smaller tech stocks that have clean balance sheets and are developing fundamental technologies, such as fiber-optic component makers Lumentum Holdings (LITE) and Finisar (FNSR); display-technology maker Universal Display (OLED); wireless-chip maker Qorvo (QRVO); design-software maker Synopsys (SNPS); and tiny Oslo-listed Thin Film Electronics (THIN.Norway), according to a detailed Barron's story. These lower-debt companies may be poised to outperform larger techs players such as Amazon.com Inc. (AMZN), Netflix Inc. (NFLX) and Tesla Inc. (TSLA), which have all loaded up on debt to fuel fast growth in times of easy money. 

The three aforementioned tech giants have spent a whopping $93 billion on property and equipment, amassing $44 billion in long-term debt, or $54 billion if accounting for long-term obligations that Netflix has for future content, as noted by Barron's. The investment has worked out well for the high-flying Silicon Valley stars, with Amazon and Netflix soaring 2,524% and 9,266% respectively over the past decade, compared to the S&P 500's 122% rise. Tesla, which went public in June 2010, has seen its valuation grow 1,533%. 

As borrowing costs increase, tech giants' cash burn may become more of an issue. While this "cooling of credit markets" may not imperil their businesses, it could temper enthusiasm for their stocks, wrote Barron's Tiernan Ray, leading investors to turn to smaller, low-debt names. These plays have been viewed as higher risk and some have not performed well compared to the broader market. (For more, see also: 7 High Return Stocks for Your Portfolio.)

Lumentum Holdings Telecommunications equipment manufacturer
Finisar Optical communication products supplier
Universal Display Display and lighting industry manufacturer and service provider
Qorvo Semiconductor company 
Synopsys Computer integrated systems design company
Thin Film Electronics Printed electronics company

Qorvo

Shares of QRVO have gained 24% year-to-date (YTD), compared to the S&P 500's 5% return in 2018. The firm provides radio-frequency systems and solutions for applications that drive wireless and broadband communication. In the fiscal fourth quarter, the semiconductor company blew past the Street's forecasts and provided a strong Q1 and fiscal 2019 outlook, reflecting an improved demand environment in China. An expanding product portfolio of 5G and GaN solutions have also been highlighted as positive drivers for the tech stock. 

Synopsys

Mountain View, Calif.-based Synopsys is at the forefront of a new era of technology, including the Internet of Things (IoT), autonomous cars, smart medical devices and secure financial services, powered by silicon chips and the software that drives them. Its tools include silicon chip designs, verification, IP integration and application security testing. Synopsys stock is up 7.6% YTD, and has an average trailing four-quarter earning surprise of 7.8%, as noted by Zack's Equity Research. Thanks to the increased adoption of Synopsys' products, as well as strength in hardware and IP, Q2 revenue jumped 14.2% year-over-year (YOY) to $776.8 million. The firm is expected to continue to outperform after a series of product launches and acquisitions. Despite risks such as customer concentration, investors have been pleased with shareholder-friendly initiatives such as the recent announcement of a $165 million share repurchase program. (For more, see also: 8 High-Profit Tech Picks From Goldman Sachs.)