Wall Street analysts have issued their lists of top stocks for the fourth quarter, and a slate of familiar names made the cut. These companies are firing on all cylinders and have more room to run, they said. CNBC Pro combed through Wall Street research to find analysts’ favorite ideas with the fourth quarter underway. They include Nvidia , Microsoft, Boeing and T-Mobile. Microsoft Buy any dip in the tech giant’s shares, Wells Fargo said earlier this week. The firm said the artificial intelligence craze has settled down quite a bit, but analyst Michael Turrin still sees considerable upside. “With MSFT shares down recently, we now see a favorable path forming ahead of an improving ROY [return on yield] model trajectory with several key catalysts ahead,” the firm said. Indeed, shares are off about 1.7% over the past month. One key event that could move the stock is Microsoft’s Ignite conference in November. “MSFT’s big product event of the year could bring a number of notable announcements as the company extends its AI-enabled Copilot offerings,” he added. The other near-term positive catalyst, according to Turrin, is the company’s earnings report due later this month. Along with greater AI services growth and “Azure stabilization,” Wells Fargo sees further upside to estimates. “We acknowledge shares are trading near historical highs, but think this is justified given its early AI lead and strong incumbent position in a tight market, esp. favorable in the current environment,” the analyst wrote. T-Mobile Goldman Sachs analyst Brett Feldman is standing by shares of the wireless giant. The firm reiterated T-Mobile as its favorite idea in the sector earlier this week. “We expect 2023 to show continued momentum at wireless ‘challengers,’ with T-Mobile and cable operators accelerating share gains,” he wrote. Feldman cited a range of positive developments for T-Mobile in his note to clients. These include growth in “underpenetrated” segments like business and rural, ongoing synergies from T-Mobile’s merger with Sprint, as well as what Feldman calls “durable” customer growth. Further, the company recently announced a $19 billion buyback program. “We also see strong valuation support based on our expectation that TMUS will return nearly $60bn to shareholders through 2025, through a combination of share buybacks and dividends, representing over 1/3rd of its market cap,” Feldman said. Finally, the stock is off by less than 1% this year, but the Goldman analyst said the shares are very attractive. Boeing Global passenger fleet capacity remains constrained, and that’s a positive for shares of aerospace giant Boeing, Bank of America analyst Ronald Epstein said. “Despite recent quality issues on the 737 MAX related to its supplier, Spirit AeroSystems, Boeing continues to reap the benefits of heightened demand for lift in the post-COVID travel environment,” he wrote. Epstein, who has the stock as a top fourth-quarter pick, is counting on the majority of Boeing’s free cash flow generation to come from the 737 program. In addition, Boeing is in a “premier position” with its jumbo jet manufacturing as the company maintains a large market share, the firm said. “Much of this is driven by the increased adoption of the 787 Dreamliner, for which we expect deliveries to continue growing sequentially,” he noted. Boeing’s stock is down 1.6% this year, but Epstein said it’s undervalued. “With shares now at the bottom of the prior two-year range, Boeing looks increasingly attractive from a technical perspective,” he said. Nvidia – Mizuho, buy rating “We see the AI compute market growing 10x over the next 5 years to > $400B/yr as companies continue to invest in AI applications, with NVDA maintaining 75-90% market share throughout the ramp powered by its Grace and Hopper offerings. With the push for greater AI adoption, we believe NVDA could potentially see a ~$65B revenue opportunity by C27E, up > 4x from the $15B we saw in F23.” Microsoft – Wells Fargo, overweight rating “With shares down recently, we now see a favorable path forming ahead of an improving ROY [return on yield] model trajectory with several key catalysts ahead. … MSFT’s big product event of the year could bring a number of notable announcements as MSFT extends its AI-enabled Copilot offerings. … Further Azure Stabilization Spells Upside To Ests. … We acknowledge shares are trading near historical highs, but think this is justified given its early AI lead & strong incumbent position in a tight market, esp. favorable in the current environment.” T-Mobile – Goldman Sachs, buy rating “We expect 2023 to show continued momentum at wireless ‘challengers,’ with TMUS & cable operators accelerating share gains. …durable postpaid phone net adds, even as sector growth moderates, owing to continued share gains in underpenetrated segments. … We also see strong valuation support based on our expectation that TMUS will return nearly $60bn to shareholders through 2025, through a combination of share buybacks and dividends, representing over 1/3rd of its market cap.” Boeing – Bank of America, buy rating “Despite recent quality issues on the 737 MAX related to its supplier, Spirit AeroSystems, Boeing continues to reap the benefits of heightened demand for lift in the post-COVID travel environment. … With shares now at the bottom of the prior two-year range, Boeing looks increasingly attractive from a technical perspective. … Premier position in the widebody market. … Much of this is driven by the increased adoption of the 787 Dreamliner, for which we expect deliveries to continue growing sequentially.”
