The onset of a new year often brings optimism along with new economic challenges. Currently, investors are navigating a landscape clouded by macroeconomic uncertainties, particularly in regard to inflation and the Federal Reserve’s trajectory on interest rates. While these concerns can create apprehension, they also present a fundamental opportunity for investors to fine-tune their portfolios by focusing on stocks with robust financials and long-term growth potential. Engaging with insights from top market analysts can be instrumental as investors identify viable options. Below, we assess three noteworthy stocks that have gained favor among Wall Street experts, providing insights into their potential for growth.
Among the key players in the ride-sharing and food delivery sectors, Uber Technologies (UBER) stands out for its recent performance despite facing headwinds. The company reported better-than-expected revenue and earnings for the third quarter of 2024, although it fell short of expectations regarding gross bookings. Mizuho analyst James Lee expresses confidence in Uber’s transformation, emphasizing the necessity of investments made this year that may temporarily affect earnings before interest, taxes, depreciation, and amortization (EBITDA).
Lee projects that these growth investments will spark a robust compound annual growth rate (CAGR) of 16% in core gross bookings from fiscal year 2023 to 2026, which aligns with Uber’s own analyst-day targets. He believes the company’s emphasis on growth, economies of scale, and operational efficiency will effectively mitigate margin risks associated with these investments. Moreover, Lee asserts that concerns regarding the slowdown in Uber’s Mobility business are overstated, predicting growth in gross bookings in the high teens for fiscal year 2025.
Intriguingly, demand for Uber’s Delivery business is also projected to exhibit mid-teens growth, bolstered by evolving verticals and sustaining market share in food delivery. Observations from Mizuho’s checks indicate a rise in order frequency and adoption rates of grocery services across the U.S., Canada, and Mexico, highlighting the company’s adaptability in changing consumer environments.
Next on the list is Datadog (DDOG), a firm that specializes in cloud monitoring and security products. After revealing impressive third-quarter results for 2024, Datadog’s stock gained further attention, particularly for its balanced approach towards the burgeoning generative artificial intelligence (AI) sector. Monness analyst Brian White advocates for Datadog’s potential and sets a price target of $155 for the stock, positioning it favorably against its peers in the competitive software landscape.
What sets Datadog apart is its strategic focus on sustainable growth without overpromising results in an industry marked by hyperbole. This pragmatism appears to resonate well with customers, as evidenced by the increase in artificial intelligence-native clients contributing to annual recurring revenue. White notes the shift in AI customers making up more than 6% of the company’s ARR in the last quarter—a clear upward trend from previous periods. He is enthusiastic about Datadog’s offerings, such as the LLM Observability and the novel AI assistant, Bits AI, which enrich the company’s value proposition and future growth.
Looking ahead, White envisions a positive trajectory for Datadog, projecting that it will harness the long-term opportunities presented by generative AI technology, thus justifying a premium valuation compared to traditional software vendors.
Finally, we explore Nvidia (NVDA), a semiconductor powerhouse poised to significantly capitalize on the increasing demand for artificial intelligence applications. Nvidia is recognized as a leading supplier of advanced graphics processing units (GPUs), essential for developing and deploying AI models. Following a dialogue with NVIDIA’s Chief Financial Officer, analysts at JPMorgan have reaffirmed a buy rating on the stock, with a projected price target of $170.
Analysts highlight that Nvidia’s production ramp-up of the Blackwell platform is advancing smoothly despite facing some supply chain constraints. The outlook for data center investments remains robust through 2025, indicating unwavering demand supported by solid management execution. Nvidia’s strategic advantages, particularly its ease of adoption for enterprise solutions over specialized hardware (ASIC), provide a competitive edge as it pursues expansive revenue growth opportunities.
Additionally, Nvidia’s entry into next-generation gaming products demonstrates its capability to diversify beyond its traditional markets, positioning itself well across various verticals, including AI PC markets. With a strong analytics record and favorable projections, Nvidia remains a key player to watch as industries increasingly transition towards accelerated computing solutions powered by AI.
In a volatile economic climate, informed investment decisions are more important than ever. The stocks highlighted—Uber, Datadog, and Nvidia—illustrate how companies can strategically position themselves for growth even in uncertain times. Their respective management strategies and market adaptations provide a testimony to their ability to not only survive but thrive, making them compelling options for investors seeking to enhance their portfolios in the coming year. Engaging with analysts’ insights effectively allows investors to glean valuable perspectives on potential growth trajectories, thereby making informed choices amidst macroeconomic challenges.