An Uber rideshare sign is posted nearby as taxis wait to pick up passengers at Los Angeles International Airport (LAX) on February 8, 2023 in Los Angeles, California.
Mario Tama | Getty Images
The new year has just begun, but macroeconomic uncertainty is already hanging over investors as Federal Reserve officials raise concerns about inflation and its impact on the rate-cutting path.
During these uncertain times, investors can boost their portfolio returns by adding stocks backed by solid financials and long-term growth opportunities. The top Wall Street analysts' investment thesis can help investors choose the right stocks because professionals base their analysis on a strong understanding of the macro environment and company-specific factors.
Here are three stocks that are favored by the Street's top pros, according to TipRanks, a platform that ranks analysts based on performance.
Uber technologies
We're starting with a ride-sharing and food delivery platform Uber technologies (ABOVE). The company achieved better-than-expected sales and earnings in the third quarter of 2024, although gross bookings fell short of expectations.
Recently, Mizuho analyst James Lee reiterated his Buy rating on Uber Technologies stock with a price target of $90. 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 boost long-term growth.
Based on his analysis, Lee expects Uber's growth investments to drive a 16% compound annual growth rate in core gross bookings from FY23 to FY26, in line with the company's analyst target of mid- to high-teens growth. The analyst is confident that Uber's EBITDA growth is on track with its analyst day target of a high 30% to 40% CAGR. “Despite the preference for growth investing, economies of scale and increased efficiency should offset margin risks,” Lee said.
Additionally, Lee believes that concerns about the growth of the company's mobility business appear overblown. The analyst expects FY25 gross bookings growth (currency neutral) to be in the high teens, with the pace of deceleration moderating compared to the second half of 2024.
Additionally, the analyst forecasts gross bookings for Uber's delivery business to remain in the mid-teens in FY25. This increase is expected to be supported by increasing introduction of new verticals while maintaining market share in food delivery. The analyst added that Mizuho's checks showed order frequency had reached another all-time high. Research also shows solid food adoption in the US, Canada and Mexico, as well as strong user penetration.
Lee is ranked #324 among more than 9,200 analysts tracked by TipRanks. Its valuations were profitable 60% of the time and delivered an average return of 12.9%. See Uber Technologies stock charts on TipRanks.
Data dog
We are moving Data dog (DOG), a company that provides cloud monitoring and security products. In November, the company reported better-than-expected third-quarter 2024 results.
On January 6, Monness analyst Brian White reiterated his Buy rating on Datadog stock with a price target of $155. The analyst believes the company is taking a more balanced approach to the generative artificial intelligence trend, avoiding “the absurd claims spread by many across the software complex.” He noted that DDOG performed well relative to its peers in a challenging software environment in 2024, but added that it underperformed other stocks in Monness's coverage universe.
Still, White expects Datadog and the broader industry to see increased activity over the next 12 to 18 months due to the long-term boom in generative AI. The analyst highlighted DDOG's outperformance relative to peers and its transparency regarding generative AI progress, noting that AI-native customers accounted for more than 6% of the company's annual recurring revenue (ARR) in Q3 2024 , up from over 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 has a higher upside relative to traditional software providers due to its cloud-native platform, rapid growth and robust long-term tailwinds in the observability space, as well as its new generative AI technology Valuation deserves growth opportunities.
White ranks No. 33 among more than 9,200 analysts tracked by TipRanks. Its valuations were profitable 69% of the time and delivered an average return of 20%. See Datadog ownership structure on TipRanks.
Nvidia
Semiconductor giant Nvidia (NVDA) is this week's third stock pick. The company is considered one of the biggest beneficiaries of the generative AI wave, seeing huge demand for its advanced GPUs (graphics processing units) required to build and run AI models.
After a fireside chat with Nvidia CFO Colette Kress, JPMorgan analyst Harlan Sur reiterated a buy recommendation for the stock with a price target of $170. The analyst highlighted the CFO's assurance that the company's Blackwell platform production ramp-up is on track thanks to solid execution despite supply chain challenges.
Additionally, the company expects data center spending to remain strong in calendar year 2025, supported by the Blackwell ramp-up and broad-based strength in demand. Additionally, Sur noted that management sees tremendous revenue growth opportunities as it secures a larger portion of the $1 trillion data center infrastructure installed base.
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-specific integrated circuit) solutions due to several strengths, including ease of adoption and its comprehensive system solutions.
Sur agreed with this point of view, saying: “We believe that enterprise, vertical market and government customers will continue to prefer Nvidia-based solutions.”
Among other key insights, Sur highlighted the launch of next-generation gaming products and opportunities to expand beyond high-end gaming into markets such as AI PCs.
Sur is ranked #35 among more than 9,200 analysts tracked by TipRanks. Its valuations were profitable 67% of the time and delivered an average return of 26.9%. See Nvidia hedge fund activity on TipRanks.