Top Wall Street Analysts Favor These Three Growth Stocks

As we step into the new year, investors are feeling the weight of macroeconomic uncertainty. Concerns about inflation and its implications for the Federal Reserve's rate policies have made the market somewhat shaky. In these challenging times, it is prudent for investors to look for stocks that are well-supported by strong financials and promising growth prospects.

The insights of leading Wall Street analysts can provide valuable guidance for investors seeking the right stocks to include in their portfolios. Here are three stocks that have garnered favor from top analysts, according to the TipRanks analyst ranking service.

Uber Technologies

First up is

Uber Technologies

(UBER), a major player in the rideshare and food delivery sectors. Recently, the company reported better-than-expected revenues and earnings for the third quarter of 2024. However, its gross bookings did not meet expectations.

James Lee, an analyst at Mizuho, reiterated a buy rating on Uber with a price target set at $90. He believes that Uber is entering a critical investment phase in 2025. Though these investments may temporarily affect the company’s earnings, they are expected to enhance long-term growth.

Lee forecasts a compound annual growth rate of 16% in Uber's core gross bookings from FY23 to FY26. This projection aligns with the company’s goals outlined during its analyst day, which foresaw a mid- to high-teens growth rate. Additionally, he is optimistic about Uber's EBITDA growth being on track to achieve a high-30s to 40% CAGR. According to Lee, the potential risks to profit margins from growth spending will be mitigated by improved economies of scale and efficiency.

He also views concerns about Uber's Mobility segment growth as exaggerated. He predicts that gross bookings for FY25 will see high-teens growth (adjusted for foreign exchange) and that the slowing rate will stabilize compared to the latter half of 2024.

In the Delivery sector, Lee forecasts gross bookings to remain in the mid-teens for FY25, attributing this to increased adoption of new services while maintaining market share in food delivery. His findings show that order frequency has hit an all-time high, with strong grocery service adoption in the U.S., Canada, and Mexico.

Datadog

Next is

Datadog

(DDOG), a cloud monitoring and security company. In November, Datadog announced strong results for the third quarter of 2024, exceeding market expectations.

On January 6, Brian White, an analyst at Monness, maintained a buy rating on Datadog with a price target set at $155. He believes that Datadog is effectively navigating the surge of generative artificial intelligence (AI) trends, avoiding the overblown claims seen in the software sector. While the company performed well compared to its peers in a tough software environment, it has not kept pace with other stocks within Monness' coverage.

White thinks that both Datadog and the wider industry will witness gradual growth in activity over the next 12 to 18 months, driven by long-term growth in generative AI. Highlighting Datadog's strong performance, he noted that AI-native customers made up over 6% of its annual recurring revenue in Q3 2024, a significant increase from past quarters.

Some of Datadog's AI initiatives, such as LLM Observability and Bits AI, have been well-recognized in the industry. Overall, White holds a positive outlook on Datadog, suggesting it merits a premium valuation due to its cloud-native platform and promising opportunities in generative AI.

Nvidia

Finally, we look at

Nvidia

(NVDA), a leading semiconductor firm that is strategically positioned to benefit from the growing demand for generative AI. The company is seeing a remarkable increase in demand for its advanced graphics processing units (GPUs), essential for developing and running AI models.

Following a discussion with Nvidia's CFO, Colette Kress, Harlan Sur, an analyst with JPMorgan, reaffirmed a buy rating on the stock, with a price target of $170. Sur emphasized that production of the company’s new Blackwell platform is progressing well, even amidst supply chain difficulties.

Nvidia expects strong spending in the data center sector to continue boosting its revenue growth throughout calendar year 2025. The company is poised to capture a larger share of the $1 trillion data center market.

Sur noted the advantages of Nvidia's products over traditional ASIC solutions, highlighting their ease of adoption and integrated system solutions. He believes that enterprise customers and various sectors will continue opting for Nvidia-based solutions.

Aside from these advantages, Sur noted that Nvidia is rolling out next-generation gaming products and aiming to expand into new markets, including AI PCs.

In conclusion, these three stocks—Uber Technologies, Datadog, and Nvidia—are garnering attention from top analysts for their growth potential, backed by favorable trends and strong financials. Investors are encouraged to consider these options as they navigate the current landscape.

stocks, growth, analysts