Top Wall Street analysts like the growth opportunities for these three stocks

The new year has only just started, but macro uncertainty is already hanging over investors, with Federal Reserve officials raising concerns over inflation and its impact on the rate-cutting path.

In these shaky times, investors can enhance 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 as they pick the right stocks, as pros base their analysis on a strong understanding of the macro environment and company-specific factors.

Here are three stocks favored by the Street’s top pros, according to TipRanks, a platform that ranks analysts based on their performance.

We start with ride-sharing and food delivery platform Uber Technologies (UBER). The company delivered better-than-expected revenue and earnings for the third quarter of 2024, though gross bookings fell short of expectations.

Recently, Mizuho analyst James Lee reiterated a buy rating on Uber Technologies stock with a price target of $90. 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 over the near term, they are expected to fuel long-term growth.

Based on his analysis, Lee expects Uber’s growth investments to drive a compound annual growth rate of 16% in core gross bookings from FY23 to FY26, in line with the company’s analyst-day 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 high-30s to 40% CAGR. “Despite leaning into growth investments, economies of scale and increased efficiency should offset margin risks,” said Lee.

Additionally, Lee thinks that worries over the growth of the company’s Mobility business seem overstated. The analyst expects FY25 gross bookings growth (forex neutral) in the high-teens, with the pace of deceleration moderating compared to the second half of 2024.

Further, the analyst projects the gross bookings for Uber’s Delivery business to remain in the mid-teens in FY25. This increase is expected to be supported by the growing adoption of new verticals while maintaining the food delivery market share. The analyst added that Mizuho’s checks revealed that order frequency has reached another all-time high. Checks also indicate solid grocery adoption in the U.S., Canada and Mexico along with robust user penetration.

Lee ranks No. 324 among more than 9,200 analysts tracked by TipRanks. His ratings have been profitable 60% of the time, delivering an average return of 12.9%. See Uber Technologies Stock Charts on TipRanks.

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

On Jan. 6, Monness analyst Brian White reiterated a buy rating on Datadog stock with a price target of $155. The analyst thinks that the company has a more balanced approach toward the generative artificial intelligence trend, “avoiding the absurd claims propagated by many across the software complex.” He noted that DDOG fared well compared to its peers in a challenging software backdrop in 2024, but added that it lagged behind other stocks in Monness’ coverage universe.

That said, White thinks that Datadog, and the broader industry, will start to see incremental activity over the next 12 to 18 months from the long-term boom in generative AI. Highlighting DDOG’s outperformance compared to peers and its transparency with regard to its generative AI progress, the analyst noted 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 thinks that the stock deserves a premium valuation compared to traditional software vendors due to its cloud-native platform, rapid growth and robust secular tailwinds in the observability space, as well as its new generative AI-led growth opportunities.

White ranks No. 33 among more than 9,200 analysts tracked by TipRanks. His ratings have been profitable 69% of the time, delivering an average return of 20%. See Datadog Ownership Structure on TipRanks.

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

Following a fireside chat with Nvidia’s CFO Colette Kress, JPMorgan analyst Harlan Sur reaffirmed a buy rating on the stock with a price target of $170. The analyst highlighted the CFO’s assurance that the ramp-up in the production of the company’s Blackwell platform is on track despite supply chain challenges, thanks to solid execution.

Moreover, the company expects spending in the data center space to remain strong in calendar year 2025, supported by the Blackwell ramp-up and broad-based strength in demand. Further, Sur noted that management sees massive revenue growth opportunities, as it grabs a larger chunk of the $1 trillion-worth datacenter infrastructure installed base.

Sur added that Nvidia expects to benefit from the shift to accelerated computing and growing demand for AI solutions. Management thinks that the company has a solid competitive advantage compared to ASIC (application-specific integrated circuit) solutions due to several strengths, including ease of adoption and its comprehensive system solutions.

Agreeing with this viewpoint, Sur said, “We believe that enterprise, vertical markets, and sovereign customers, will continue to prefer Nvidia-based solutions.”

Among the other key takeaways, Sur highlighted the rollout of next-generation gaming products and opportunities to expand beyond high-end gaming into markets like AI PCs. 

Sur ranks No. 35 among more than 9,200 analysts tracked by TipRanks. His ratings have been profitable 67% of the time, delivering an average return of 26.9%. See Nvidia Hedge Funds Activity on TipRanks.