Products You May Like
Optimism around artificial intelligence has helped lift the S&P 500 in 2024, boosting key chip stocks and power plays in the utilities space.
Investors seeking sustainable returns will need to look for companies with solid long-term growth potential.
To this end, top Wall Street analysts, with their expertise, can help investors understand the key drivers that could support a company’s long-term growth and pick stocks that are likely to deliver lucrative returns.
Here are three stocks favored by the Street’s top pros, according to TipRanks, a platform that ranks analysts based on their past performance.
Fortinet
This week’s first pick is cybersecurity company Fortinet (FTNT). The company aims to become a leader in the secure access service edge space. Fortinet leverages machine learning and AI technologies to offer cybersecurity solutions.
Recently, TD Cowen analyst Shaul Eyal reaffirmed a buy rating on Fortinet stock and raised the price target to $90 from $75. The analyst stated that channel checks and discussions with industry participants indicate continued recovery in FTNT’s business and healthy demand across the company’s broad product portfolio.
In fact, channel checks suggest that Fortinet’s third-quarter revenue and billings will reach the top end of the company’s outlook, with the possibility of a modest upside. Also, the analyst is confident about his Q4 revenue growth estimate of 12%, given “healthy closure rates and further pipeline building into a seasonally strong 4Q24.”
Eyal also noted that one of the key drivers supporting Fortinet’s ongoing recovery is the solid traction in the company’s operational technology products, backed by a long-term replacement cycle that will replace legacy OT systems. The analyst added that FTNT is also gaining from the adoption of AI-led networks and the company’s growing focus on cloud security, which was bolstered by the recent acquisition of Lacework.
Eyal ranks No. 12 among more than 9,100 analysts tracked by TipRanks. His ratings have been profitable 71% of the time, delivering an average return of 27.3%. (See Fortinet Insider Trading Activity on TipRanks)
GitLab
We move on to GitLab (GTLB), an AI-powered, cloud-based software company that helps organizations enhance developer productivity, improve operational efficiency, and reduce security and compliance risks.
Following meetings with the company’s management, Mizuho analyst Gregg Moskowitz reiterated a buy rating on GitLab stock with a price target of $62. The analyst noted that management is highly confident about capturing further opportunities in the $40 billion total addressable market. Currently, the two vendors, GitLab and Microsoft’s GitHub, together account for just about 5% of the market share in the software development life cycle space.
In particular, management expects the momentum for GitLab’s Duo Pro product to pick up in 2025, fueled by the generative AI wave. The analyst also highlighted the company’s optimism about the GitLab Dedicated offering, which is witnessing better-than-anticipated customer interest and driving higher average revenue per unit.
Overall, Moskowitz remains “constructive on GTLB’s ability to execute and grow at a high level over the medium-to-longer term, due in large part to multiple upside levers that include seat expansion, price increases, and upsell potential.”
Moskowitz ranks No. 321 among more than 9,100 analysts tracked by TipRanks. His ratings have been profitable 58% of the time, delivering an average return of 12.6%. (See GitLab’s Hedge Fund Activity on TipRanks)
Nvidia
Finally, let’s look at semiconductor giant Nvidia (NVDA). The company has been seeing stellar revenue growth rates, driven by robust demand for its advanced GPUs (graphics processing units) in building artificial intelligence models and applications.
Following an investor meeting with Nvidia’s management, Goldman Sachs analyst Toshiya Hari reiterated a buy rating on NVDA stock and raised the price target to $150 from $135.
The analyst’s optimism after the meeting reflects a “better appreciation of the company’s competitive moat and, importantly, the projected increase in Inference workload complexity as well as its implications for future compute demand.”
Hari noted Nvidia’s confidence about the demand backdrop, given continued spending on accelerated computing and GPUs by data center operators amid the generative AI wave. Management also highlighted the prospects for its Blackwell platform. The analyst thinks that Blackwell’s launch and ramp-up are not just near- and medium-term revenue growth drivers, but also key factors that will enhance Nvidia’s competitive advantage.
Hari increased his revenue estimates for fiscal 2025-2027 to reflect recent industry developments like increased cloud spending, solid order trends at the major AI server original equipment manufacturers like Dell and Hewlett Packard Enterprise, and an improved chip-on-wafer-on-substrate shipment outlook.
Hari ranks No. 32 among more than 9,100 analysts tracked by TipRanks. His ratings have been successful 68% of the time, delivering an average return of 27.5%. (See Nvidia Stock Charts on TipRanks)