Top Wall Street analysts like the upside for these three stocks

The new year has only just begun, but macro uncertainty is already hanging over investors, with Federal Reserve officials expressing concern about inflation and its impact on the path of rate cuts.

In these uncertain times, investors can increase the return of their portfolios by adding stocks backed by solid financials and long-term growth opportunities. The investment thesis of top Wall Street analysts can inform investors as they pick the right stocks, as professionals base their analysis on a strong understanding of the macro environment and company-specific factors.

Here are three favorite stocks the main professionals of the streetaccording to TipRanks, a platform that ranks analysts based on their performance.

We are starting with a ride sharing and food delivery platform Uber technologies (UBER). The company achieved revenues and earnings higher than expected third quarter of 2024although gross bookings are below expectations.

Recently, Mizuho analyst James Lee reiterated a Buy rating on Uber Technologies stock with a $90 price target. The analyst sees 2025 as an investment year for UBER. While these investments could impact the company’s earnings before interest, taxes, depreciation and amortization in the short term, they are expected to drive long-term growth.

Based on his analysis, Lee expects Uber’s growth investments to drive a compound annual growth rate of 16% in underlying gross bookings from FY23-26, in line with the company’s analysts’ daily target of mid- to high-teens growth. The analyst is confident that Uber’s EBITDA growth is on track with analysts targeting a high 30% to 40% CAGR. “Despite the tilt towards growth investments, economies of scale and increased efficiency should offset margin risks,” Lee said.

Additionally, Lee thinks that concerns about the growth of the company’s mobility business seem overblown. The analyst expects gross bookings growth in FY25 (forex neutral) in the middle ages, with a moderate pace of slowdown compared to the second half of 2024.

Further, the analyst predicts that gross bookings for Uber’s delivery business will remain in the mid-range in FY25. This increase is expected to be supported by the increasing adoption of new verticals while retaining food delivery market share. The analyst added that Mizuho’s checks revealed that order frequency reached another all-time high. Checks also indicate good grocery acceptance in the US, Canada and Mexico, along with strong user penetration.

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

We are moving to Datadog (DDOG), a company that offers cloud monitoring and security products. In November, the company announced better-than-expected results for the third quarter of 2024.

January 6, Monness analyst Brian White reiterated a Buy rating on Datadog stock with a $155 price target. The analyst believes that the company has a more balanced approach to the generative artificial intelligence trend, “avoiding the absurd claims propagated by many in the software complex.” He noted that DDOG fared well against peers against a challenging software backdrop in 2024, but added that it lagged behind other stocks in Monness’s coverage universe.

Still, White believes that Datadog and the broader industry will begin to see incremental activity over the next 12 to 18 months due to the long-term boom in generative artificial intelligence. Highlighting DDOG’s outperformance compared to competitors and its transparency regarding generative AI advancements, the analyst noted that native AI clients accounted for more than 6% of the company’s annual recurring revenue (ARR) in Q3 2024, up from more than 4% in Q2 2024 and 2.5% in Q3 2023.

White also highlighted some of the company’s AI offerings, including LLM Observability and its gen AI assistant, Bits AI. Overall, the analyst is bullish on Datadog and believes the stock deserves a superior valuation compared to traditional software vendors due to its cloud-native platform, rapid growth and strong secular tailwinds in the visibility space, as well as its new generative AI-driven platform. growth opportunities.

White is ranked No. 33 out of more than 9,200 analysts tracked by TipRanks. His ratings were profitable 69% of the time, yielding an average return of 20%. See Ownership structure of Datadog on TipRanks.

Semiconductor div Nvidia (NVDA) is this week’s third stock selection. The company is considered one of the main beneficiaries of the generative AI wave and is experiencing incredible demand for its 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 noted the CFO’s reassurance that the company’s Blackwell platform production ramp-up is on track despite supply chain challenges, thanks to solid performance.

Moreover, the company expects spending in the data center space to remain strong in calendar year 2025, supported by Blackwell’s increase and broad-based demand strength. Furthermore, Sur noted that management sees huge opportunities for revenue growth as it grabs much of the $1 trillion installed base of data center infrastructure.

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

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

Among other key moves, Sur highlighted the introduction of next-generation gaming products and opportunities to expand beyond high-end gaming into markets like artificial intelligence computing.

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