Top Wall Street Analysts Favor Growth in Three Prominent Stocks

As we enter the new year, investors face ongoing macroeconomic uncertainty, with inflation concerns and potential interest rate adjustments from Federal Reserve officials lingering in the backdrop.

In these fluctuating market conditions, investors can seek to enhance their portfolio returns by considering stocks that have robust financials and promising long-term growth prospects. Insights from leading Wall Street analysts can provide valuable guidance as investors navigate their stock selection based on a solid understanding of both macroeconomic environments and specific company dynamics.

Uber Technologies

First on our list is Uber Technologies (UBER), recognized for its rideshare and food delivery services. The company recently reported better-than-expected revenue and earnings for the third quarter of 2024, notwithstanding that its gross bookings did not meet forecasts.

Mizuho analyst James Lee has retained a buy rating on Uber Technologies, setting a price target of $90. Lee anticipates that 2025 will be a year of significant investment for UBER, which may influence the company's short-term earnings before interest, taxes, depreciation, and amortization (EBITDA). However, these investments are projected to support long-term growth.

Lee's analysis suggests that Uber's growth strategies are likely to yield a compound annual growth rate (CAGR) of 16% in core gross bookings from FY23 through FY26, consistent with the company’s targets outlined during its analyst day focused on mid- to high-teens growth. Lee further predicts EBITDA growth aligning with the high-30s to 40% CAGR target set by the company. He states, “Despite focusing on growth investments, the benefits of economies of scale and enhanced efficiency should mitigate potential margin risks.”

Additionally, Lee believes that concerns regarding the expansion of Uber’s Mobility segment are exaggerated. He anticipates FY25 gross bookings growth (adjusted for foreign exchange) will reach the high-teens, suggesting a moderation in the slowdown compared to the latter half of 2024.

For Uber’s Delivery segment, Lee forecasts growth in the mid-teens for FY25, backed by the increasing popularity of new verticals while sustaining its share in the food delivery market. Furthermore, his checks indicate that order frequency has hit an all-time high, and there is strong grocery adoption across the U.S., Canada, and Mexico, evidenced by solid user integration.

Lee ranks at No. 324 among over 9,200 analysts tracked, with a successful rating record of 60% yielding an average return of 12.9%.

Datadog

Next, we explore Datadog (DDOG), a company specializing in cloud monitoring and security solutions. In November, Datadog revealed better-than-anticipated results for the third quarter of 2024.

On January 6, Monness analyst Brian White reiterated a buy rating on Datadog stock, with a price target set at $155. He believes that the company is taking a more measured approach to the generative artificial intelligence (AI) trend, avoiding the exaggerated claims that have surfaced in the software industry. White acknowledged that Datadog outperformed many peers during challenging conditions in 2024, although it lagged behind some companies in his coverage universe.

Despite this, White is optimistic that Datadog and the broader software market will witness sequential growth over the next 12 to 18 months due to the anticipated boom in generative AI. He emphasized that AI-driven customers represent over 6% of the company’s annual recurring revenue (ARR) in Q3 2024, a notable increase from the prior quarters.

Some of the AI offerings highlighted by White include LLM Observability and Bits AI, Datadog's generative AI assistant. He believes the stock deserves a premium valuation compared to traditional software vendors due to its cloud-native platform, rapid growth, and strong tailwinds from the observability market as well as its fresh opportunities in generative AI growth.

Brian White ranks No. 33 among over 9,200 analysts tracked by TipRanks, recording a profitable rating rate of 69% with an average return of 20%.

Nvidia

Also making the list is semiconductor leader Nvidia (NVDA), which is recognized as a key beneficiary of the current generative AI trend, experiencing high demand for its cutting-edge GPUs (graphics processing units) essential for AI model development and deployment.

After a discussion with Nvidia's CFO Colette Kress, JPMorgan analyst Harlan Sur has reaffirmed a buy rating on the stock, with a price target of $170. Sur noted Kress’ confirmation that production of the Blackwell platform is progressing as planned, despite some supply chain challenges, due to effective management.

Additionally, Nvidia anticipates robust spending in the data center sector throughout 2025, bolstered by the Blackwell rollout and sustained demand. Sur acknowledged multiple revenue growth opportunities as Nvidia taps into a larger segment of the $1 trillion datacenter infrastructure market.

Moreover, Sur believes that Nvidia will gain from the broadening demand for AI solutions and a transition to accelerated computing. The management shared that the company enjoys a competitive edge over ASIC (application-specific integrated circuit) solutions due to its easy adoption and comprehensive system offerings. Sur stated, “We believe that enterprise clients and vertical markets will continue to prefer Nvidia-based solutions.”

In closing, Sur emphasized the importance of launching next-generation gaming products and opportunities for expansion beyond high-end gaming into markets such as AI-driven PCs.

Sur ranks No. 35 among more than 9,200 analysts and has a rating success of approximately 67%, achieving an average return of 26.9%.Stocks, Investing, Growth