Top Wall Street analysts like the growth potential of these three stocks

The new year has barely begun, but macro uncertainty is already hanging over investors, with Federal Reserve officials expressing concerns about inflation and its impact on the rate cut path.

In these volatile times, investors can improve their portfolio returns by adding stocks backed by solid financials and long-term growth opportunities. The investment thesis of top Wall Street analysts can inform investors when picking the right stocks, as professionals base their analysis on a strong understanding of the macro environment and company-specific factors.

Here are three stocks favored by the best professionals on 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 delivered better-than-expected revenue and earnings for third quarter of 2024although gross bookings fell short of expectations.

Mizuho analyst recently James Lee reiterated a buy rating on Uber Technologies stock with a $90 price target. The analyst sees 2025. as a year of investment for UBER. While these investments could impact the company’s earnings before interest, taxes, depreciation and amortization in the near 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 to FY26, in line with the company’s analyst-day target for growth in the mid- and high-teens. The analyst is confident that Uber’s EBITDA growth is in line with the analyst’s daily target of a high 30 to 40% CAGR. “Despite the propensity for growth investments, economies of scale and increased efficiency should offset margin risks,” Lee said.

Furthermore, Lee believes that concerns about the growth of the company’s mobility business appear to be overblown. The analyst expects growth in gross bookings in 2015. (forex neutral) in the teens, with the rate of deceleration slowing compared to the second half of 2024.

The analyst also forecast gross bookings for Uber’s delivery business to remain in the mid-teens in FY25. This increase is expected to be fueled by the growing adoption of new verticals while maintaining food delivery market share. The analyst added that Mizuho’s checks revealed that order frequency had reached a new all-time high. Checks also show steady grocery adoption in the US, Canada and Mexico, along with steady consumer penetration.

Lee is ranked No. 324 among more than 9,200 analysts tracked by TipRanks. Its ratings are profitable 60% of the time, delivering an average return of 12.9%. Look Uber Technologies stock charts on TipRanks.

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

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

However, White believes that Datadog and the wider industry will start to see increased activity in the next 12 to 18 months from the long-term boom in generative AI. Highlighting DDOG’s superiority over competitors and its transparency on generative AI progress, the analyst noted that native AI 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 AI assistant, Bits AI. Overall, the analyst is bullish on Datadog and believes the stock deserves a premium rating compared to traditional software vendors due to its cloud platform, rapid growth and solid secular tailwinds in the surveillance space, as well as its new AI-driven generative growth opportunities.

White is ranked No. 33 among more than 9,200 analysts tracked by TipRanks. Its ratings have been profitable 69% of the time, delivering an average return of 20%. Look Datadog’s ownership structure on TipRanks.

A semiconductor giant Nvidia (NVDA) is this week’s third stock pick. The company is considered one of the main beneficiaries of the generative AI wave and is experiencing stellar demand for its advanced graphics processing units (GPUs), which are needed to build and run AI models.

After a fireside chat with Nvidia CFO Colette Kress, a JPMorgan analyst Harlan Suhr reaffirmed a buy rating on the stock with a $170 price target. The analyst highlighted the CFO’s confidence that production growth on the company’s Blackwell platform is on track despite supply chain challenges, thanks to solid execution.

The company also expects spending in the data center space to remain strong through calendar year 2025, supported by Blackwell growth and broad-based demand. Surr also noted that management sees huge opportunities for revenue growth as it grabs more 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 specific integrated circuit) solutions due to several strengths, including ease of adoption and end-to-end system solutions.

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

Among other key takeaways, Sur highlighted the deployment of next-generation gaming products and opportunities to expand beyond high-end gaming into markets such as AI computing.

Sur is ranked #35 among more than 9,200 analysts tracked by TipRanks. Its ratings are profitable 67% of the time, delivering an average return of 26.9%. Look Nvidia hedge fund activity on TipRanks.