In the early days of a new year, volatility in the market can leave investors feeling uneasy. The emerging discussions around inflation and its implications, particularly from Federal Reserve officials, are causing ripples in investment strategies. Yet, amidst this macroeconomic uncertainty, savvy investors are finding opportunities. By honing in on stocks with robust financial fundamentals and favorable long-term trajectories, one can truly bolster their portfolio. Wall Street analysts, backed by their in-depth market understanding, are invaluable resources in this journey. Here, we will explore three stocks currently receiving accolades from prominent analysts, highlighting why they may be promising additions to any discerning investor’s watchlist.
Uber Technologies (UBER), a leader in the ride-sharing and food delivery markets, has shown resilience despite recent challenges. In the third quarter of 2024, Uber reported revenue and earnings that outstripped expectations; however, it noted that gross bookings did not quite reach anticipated levels. Mizuho’s analyst, James Lee, remains bullish on Uber, maintaining a “buy” rating and setting a price target of $90.
Lee’s perspective is rooted in his belief that 2025 will be a transformative year for Uber, as the company plans to ramp up investments that may temporarily impact earnings but are crucial for sustainable, long-term growth. His analysis anticipates robust growth in core gross bookings, projecting a compounded annual growth rate (CAGR) of 16% from fiscal year 2023 through 2026. This aligns with Uber’s guidance for consistent mid-to-high teen growth. Furthermore, Lee is confident in Uber’s ability to manage EBITDA growth while controlling margin risks through enhanced operational efficiencies.
Concerns about the stagnation of Uber’s Mobility division seem exaggerated to Lee, who predicts that gross booking growth for 2025 will still flourish in the high-teens, signaling a deceleration that will moderate compared to the latter half of 2024. The delivery aspect of Uber’s business is also showing strength, with anticipated gross bookings growth in the mid-teens, bolstered by expanding user adoption and emerging verticals, solidifying Uber’s foothold in the competitive landscape.
Next on the radar is Datadog (DDOG), a player in the cloud monitoring and security sector that has recently outperformed market expectations. Following the company’s impressive Q3 2024 results, Monness analyst Brian White reiterated his “buy” rating and established a target price of $155 for the stock.
White stresses the company’s strategic approach towards integrating generative artificial intelligence within its offerings. Rather than making bold assertions like many software counterparts, Datadog has embraced a more nuanced trajectory. The firm is gaining notable traction in the AI realm, with AI-native clients accounting for a growing share of annual recurring revenue (ARR), jumping from 2.5% in Q3 2023 to 6% in the latest quarter.
White highlights Datadog’s innovative products, such as its LLM Observability and Bits AI assistant, emphasizing the company’s potential to sustain growth amid an evolving technological landscape. He recognizes that Datadog’s cloud-native framework and its emphasis on observability position it favorably compared to traditional software constructs. As the market witnesses an ongoing shift towards AI-led solutions, White believes Datadog is well-equipped to command a premium valuation, making it a strong candidate for investors looking to capitalize on the cloud movement.
Finally, we turn to Nvidia (NVDA), a powerhouse in the semiconductor industry, heralded as one of the primary beneficiaries of the generative AI boom. Following a recent discussion with Nvidia’s CFO, Harlan Sur from JPMorgan reiterated a “buy” rating with a price target of $170.
Sur points out that Nvidia continues to navigate supply chain complexities efficiently, ensuring that its Blackwell platform production remains on course. The anticipated increase in data center expenditures for 2025 furthers optimism, as the company prepares to seize substantial growth from a vast $1 trillion datacenter infrastructure market.
Management envisions significant growth potential driven by a shift towards accelerated computing and an uptick in demand for AI solutions. The strengths that Nvidia possesses over competing solutions, especially its easy-to-adopt and comprehensive system offerings, bolster Sur’s confidence. With an expansive portfolio that extends into the gaming sector and emerging AI markets, Nvidia’s trajectory reflects a commitment to innovation that bodes well for its continued dominance.
As 2024 unfolds, the backdrop of macroeconomic uncertainty calls for careful investment strategies. By leaning into stocks with stable fundamentals like Uber, Datadog, and Nvidia, investors may find themselves better positioned in a fluctuating market. The insights from top Wall Street analysts reveal not only the potential for these companies to thrive, but also the broader trends shaping the economic landscape. Understanding these dynamics can empower investors to make informed, strategic moves, ultimately yielding enhanced portfolio returns in uncertain times.