Top Wall Street analysts like the upside potential of these three stocks

The new year has just begun, but macro uncertainty is already hanging over investors, with the Federal Reserve raising concerns about inflation and its impact on rate cuts.

In these volatile times, investors can increase their portfolio’s returns by adding stocks backed by solid financials and long-term growth opportunities. Investment theses from leading Wall Street analysts can inform investors when they are picking the right stocks, as professionals base their analysis on a deep understanding of the macro environment and company-specific factors.

Here are three preferred stocks top professionals Streetaccording to TipRanks, a platform that ranks analysts based on their performance.

We are starting with a ride sharing and food delivery platform Uber technology (UBER). The company received better-than-expected earnings and profits for third quarter of 2024though overall bookings fell short of expectations.

Mizuho analyst recently James Lee reaffirmed a buy rating with a $90 price target on shares of Uber Technologies. The analyst sees 2025 as an investment year for UBER. While these investments may impact the company’s earnings before interest, taxes, depreciation and amortization in the near term, they are expected to drive long-term growth.

Based on his analysis, Lee expects Uber’s growth investment to lead to compound annual growth in underlying gross bookings from FY23 to FY26 of 16%, according to the company’s analysts’ daily target for growth in the low-teens. The analyst is confident that Uber’s EBITDA growth is in line with analysts’ guidance of 30% to 40% CAGR. “Despite the investment in growth, economies of scale and efficiency gains should offset the margin risks,” Lee said.

In addition, Lee believes that the company’s growing mobility concerns seem overblown. The analyst expects gross bookings growth in FY25 (forex neutral) to be in the low-teens, with the rate of slowdown easing from the second half of 2024.

Additionally, the analyst predicts that gross bookings for Uber’s delivery business will remain in the mid-teens in FY25. This increase is expected to be supported by growing adoption of new verticals while maintaining food delivery market share. The analyst added that Mizuho’s checks showed that order frequency had reached another all-time high. Audits also show solid grocery store penetration and strong user penetration in the US, Canada and Mexico.

Lee is ranked #324 out of more than 9,200 analysts tracked by TipRanks. Its ratings were profitable 60% of the time, providing an average return of 12.9%. See Uber Technologies stock charts on TipRanks.

Let’s move to Datadog (A DOG), a company that offers cloud monitoring and security products. In November, the company reported better-than-expected results for the third quarter of 2024.

On January 6, analyst Monness Brian White reiterated a buy rating on shares of Datadog with a $155 price target. The analyst believes that the company has a more balanced approach to the trend of generative artificial intelligence, “avoiding the absurd statements that are spread by many throughout the software complex.” He noted that DDOG performed well in 2024 compared to its peers in non-core software, but added that it lagged behind other stocks in the Monness coverage universe.

However, White believes that Datadog and the industry as a whole will begin to see incremental activity over the next 12 to 18 months due to the long-term boom in generative AI. Highlighting DDOG’s better performance compared to peers and its transparency regarding generative AI progress, the analyst noted that its own AI clients accounted for more than 6% of the company’s annual recurring revenue (ARR) in Q3 2024. compared to more than 4% in 3Q2024. Q2 2024 and 2.5% in Q3 2023.

White also highlighted some of the company’s AI offerings, including LLM Observability and its next generation artificial intelligence assistant Bits AI. Overall, the analyst is bullish on Datadog and believes the stock deserves a higher valuation than traditional software vendors due to its cloud platform, fast growth and strong secular pivots in the surveillance space, as well as emerging generative artificial intelligence. growth opportunities.

White is ranked No. 33 among the more than 9,200 analysts tracked by TipRanks. Its ratings were profitable 69% of the time, providing an average return of 20%. See Datadog ownership structure on TipRanks.

Semiconductor giant Nvidia (NVDA) is the third stock pick this week. The company is considered one of the main beneficiaries of the generative AI wave and is experiencing tremendous demand for the advanced GPUs (graphics processing units) needed to build and run AI models.

After a fireside chat with Nvidia CFO Colette Kress, an analyst at JPMorgan Harlan Sur reaffirmed a buy rating on the stock with a $170 price target. The analyst highlighted the CFO’s assurances that the company’s Blackwell platform production ramp-up is on track despite supply chain challenges, thanks to strong execution.

Moreover, the company expects data center spending to remain strong through calendar year 2025, supporting Blackwell’s ramp-up and broad demand. In addition, Suhr noted that management sees huge opportunities for revenue growth as it captures a larger slice of the $1 trillion data center installed base.

Sur added that Nvidia expects to benefit from the shift to accelerated computing and growing demand for AI solutions. Management believes that the company has a strong competitive advantage over ASIC (specific integrated circuit) solutions due to several strengths, including ease of adoption and comprehensive system solutions.

Concurring with this view, Suhr said: “We believe that enterprise, vertical markets and sovereign customers will continue to prefer Nvidia-based solutions.”

Among other key takeaways, Sur noted the rollout of next-generation gaming products and opportunities to expand beyond high-end gaming into markets such as AI PCs.

Sur is ranked #35 out of over 9,200 analysts tracked by TipRanks. Its ratings were profitable 67% of the time, providing an average return of 26.9%. See Nvidia hedge fund activity on TipRanks.