As the calendar has flipped to a new year, financial markets are grappling with an undercurrent of macroeconomic uncertainty. The Federal Reserve’s ongoing discussions about inflation and its implications raise questions for investors regarding interest rates and market stability. However, amidst this volatility, there lies an opportunity for strategic investors to enhance their portfolios by targeting stocks with solid fundamentals and promising growth narratives. By utilizing insights from leading Wall Street analysts, investors can better navigate the tumultuous landscape of today’s market. In this article, we’ll discuss three compelling stocks recommended by top analysts as potential anchors for investor portfolios in 2024.
Among the stocks that are generating interest is Uber Technologies (UBER), known primarily for its ride-hailing and food delivery services. Recently, the company reported third-quarter results that surpassed revenue and earnings expectations, albeit with gross bookings falling slightly short. Mizuho analyst James Lee remains optimistic, reiterating a ‘buy’ rating with a price target set at $90. Lee believes 2025 will be a pivotal year for Uber as it channels investments aimed at fostering long-term growth, even if they may momentarily affect earnings before interest, taxes, depreciation, and amortization (EBITDA).
Lee’s analysis indicates a compound annual growth rate (CAGR) of 16% in core gross bookings from fiscal year 2023 to 2026, aligning with Uber’s growth target of mid- to high-teens growth rates. A key point of confidence for the analyst is Uber’s ability to maintain operating efficiency and benefit from economies of scale, minimizing any potential margin risks associated with growth expenditures. He projects a rebound in gross bookings for Uber’s Mobility segment in FY25 and anticipates sustained activity in its Delivery business, fueled by increased adoption of new service areas and a continued firm hold on food delivery market share.
Transitioning to the software sector, Datadog (DDOG) also stands out as a stock favored by analysts. Recently, the company posted third-quarter results that exceeded expectations, positioning itself favorably in the competitive landscape of cloud monitoring and security. Monness analyst Brian White remains bullish on Datadog, maintaining a ‘buy’ rating with a price target of $155. What sets Datadog apart is its pragmatic approach to the burgeoning generative AI trend, and White highlights that the company has steered clear of the overblown claims often seen in the tech sector.
During challenging market conditions in 2024, Datadog has demonstrated resilience and outperformed many peers, despite some lagging behind in specific metrics. The analyst projects that the next 12 to 18 months will usher in increased activity in the generative AI space, which Datadog is strategically poised to capitalize on. Notably, AI-focused customers now comprise over 6% of the company’s annual recurring revenue, reflecting a significant increase over the past year. With robust offerings like LLM Observability and Bits AI, White views Datadog as deserving of a premium valuation compared to traditional software competitors.
Another stock capturing the attention of investors is Nvidia (NVDA), a titan in the semiconductor industry. Nvidia is well-positioned to benefit from the explosive demand for graphics processing units (GPUs), a critical component for developing and deploying AI models. Following a recent discussion with Nvidia’s CFO, JPMorgan analyst Harlan Sur maintained a ‘buy’ rating with a target price of $170, citing the company’s effective navigation of production challenges and unwavering demand in the data center space.
Sur underscores the massive revenue opportunities Nvidia stands to gain as it continues to expand its share in the $1 trillion data center infrastructure market. The analyst emphasizes Nvidia’s competitive edge in accelerated computing solutions, noting that customers—including enterprises and government sectors—favor Nvidia’s comprehensive systems approach. Additionally, Sur anticipates strategic expansions in next-generation gaming products and AI PCs, further bolstering Nvidia’s market positioning.
As investors wrestle with economic headwinds and the potential for fluctuating interest rates, thoughtfully chosen stocks can serve as essential components of a resilient portfolio. The insights provided by Wall Street analysts lend credence to the case for investing in Uber Technologies, Datadog, and Nvidia. Each company presents a unique narrative supported by strong fundamentals, promising growth projections, and strategic maneuvering in an evolving market landscape. Investors looking to capitalize on these insights may find that these stocks are well-suited to weather economic uncertainties and offer opportunities for long-term enhancement of portfolio returns.