The tech sector has been heating up over the past few months. Despite the hotter inflation report that weighed on broader two weeks ago, certain tech stocks still seem worthy of consideration.
Don't Miss our Black Friday Offers:
- Unlock your investing potential with TipRanks Premium - Now At 40% OFF!
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
Undoubtedly, the tech scene continues to be a scary place to invest. Hot inflation numbers aren’t making it easy on the Federal Reserve, which may need to maintain its hawkish tone for a while longer.
The Fed does not want to undo the past year of progress as it looks to pull inflation down. As a result, the tech industry has already endured massive layoffs due to tightening credit conditions and other macro woes.
Not all tech firms will adapt to these harsher conditions, but the following two highly-rated tech stocks, I believe, seem likeliest to shrug off recent woes troubling the highest-growth areas of the market.
Therefore, let’s check in on two names — NVDA and UBER — that could continue trending higher from here, even as a downturn touches down.
Uber (NASDAQ:UBER)
Uber is a ride-hailing giant that has big plans for the next few quarters as it looks to drive toward GAAP profitability. I am bullish.
The company is fresh off of a magnificent fourth quarter that saw the company clock in a surprise positive EPS figure of $0.29, well above expectations calling for a per-share loss of $0.15.
Total revenue for the quarter rose to $8.6 billion, a 49% year-over-year increase. Trip requests also surged 19% year-over-year. Indeed, Uber has come such a long way since the messy days of the early pandemic when demand struggled to keep up with supply.
With an industry-leading network of drivers and users, an Uber One subscription program that could get quite addictive for users who make good use of Eats and Rides, and a strong management team, it should be no mystery as to why Uber is continuing to pull ahead of peers in the space.
Over time, I expect the gap to widen as Uber continues to narrow its losses en route to sustained GAAP profitability. The company’s network is just too strong to stack up against, and management’s focus on improving profitability prospects could make UBER stock tough to stop in its tracks.
Up ahead, the company expects first-quarter gross bookings to rise by 20%-24% year-over-year. After an applaud-worthy quarter, I think it’s safe to say Uber is on track to hit its coming targets ahead of schedule.
What is the Price Target for UBER Stock?
Wall Street still loves Uber, with 24 Buys and one Hold. The average UBER stock price target of $47.71 implies 37.2% gains from current levels.
Nvidia (NASDAQ:NVDA)
Nvidia is a GPU giant that’s been incredibly hot of late. Shares are up nearly 50% year-to-date. Though Nvidia is overdue for a pullback, it’s hard not to be enthusiastic about the name amid the recent bout of artificial intelligence (AI) hype. Nonetheless, I am neutral on the stock.
Nvidia continues to be the hardware firm to bet on the future of AI technologies, and its chips don’t just stop at AI. The metaverse is another trend that could pave the way for unprecedented demand. Indeed, Nvidia may be just a semiconductor stock, but it’s one that stands behind many emerging technologies. In that regard, Nvidia may be more of a diverse play on the future of tech than you’d think.
Recently, Bank of America’s (NYSE:BAC) Vivek Arya sat down with CNBC, noting that he expects Nvidia to have a lot to gain from the rise of AI. There’s no question that Nvidia has many secular tailwinds behind it. That said, its valuation remains a question mark amid continued rate hikes and medium-term macro headwinds.
At 19.5 times sales and 51 times forward earnings (well above semiconductor industry averages), Nvidia is an expensive stock once again. Sure, Nvidia will play a big role in the AI race, but there’s a good chance the hype behind the name is a tad overextended. As such, I’d prefer to be a buyer of pullbacks rather than a chaser of momentum.
What is the Price Target for NVDA Stock?
Overall, Wall Street likes the GPU giant, with a “Moderate Buy” rating comprised of 13 Buys, two Holds, and two Sells. The average NVDA stock price target of $232.59 suggests 8.8% upside for the year ahead.
The Takeaway
At the end of the day, innovation could play a major role in helping firms navigate through a coming recession. With that, there are several battered tech stocks that can move on from their bear market moments en route to higher levels. Nvidia and Uber are two intriguing names to consider.
