Shares of Palantir Technologies (PLTR +2.45%) have climbed by 255% over the last year, bringing its market value to about $200 billion. However, several Wall Street analysts expect Advanced Micro Devices (AMD 0.03%) and Uber Technologies (UBER +0.77%) to top that market cap in the next year. Among them:
- Jim Kelleher at Argus Research has a 12-month price target of $160 per share on AMD. That would amount to a 52% gain from its current share price of around $105, and a $260 billion market cap on the company.
- Mark Mahaney at Evercore has set a 12-month price target of $115 per share on Uber. That implies a 55% upside from its current share price of $74, and a $240 billion market cap.
Here's what investors should know about AMD and Uber.
NASDAQ: AMD
Key Data Points
Advanced Micro Devices: 52% implied upside
AMD designs chips for four key end markets: data centers, client (laptops and desktops), video game consoles, and embedded processors. The company in recent years has consistently gained market share in central processing units (CPUs) in the client and data center segments, while Intel has lost market share. But AMD has failed to take share from Nvidia in the markets for graphics processing units (GPUs) and the similar (but more specialized) chips dubbed artificial intelligence (AI) accelerators.
Overall, AMD reported strong financial results in the fourth quarter, but the market was disappointed because its data center sales missed estimates. Total revenue increased 24% to $7.6 billion and non-GAAP net income increased 42% to $1.09 per diluted share. On the earnings call, CEO Lisa Su told analysts that AMD's data center AI sales would increase from $5 billion in 2024 to "tens of billions of dollars of annual revenue over the coming years."
Kelleher at Argus Research recently wrote: "Share gains in client and in data center CPUs, market leadership in console gaming, and the much-enhanced embedded business all position AMD for long-term growth exceeding that of the peer group." He also argued that AMD's share price does not accurately reflect its long-term growth potential as it continues to take CPU share from Intel and possibly win GPU share from Nvidia.
On that note, investors are understandably disappointed that AMD has not come close to matching Nvidia's growth. And while I doubt that will change in the future, I do think the market has become overly pessimistic where AMD is concerned. Wall Street expects the company's earnings to increase by 40% in 2025. That makes its current valuation of 32 times earnings look downright cheap.
If AMD's data center GPU revenue accelerates in the second half of 2025 as CEO Lisa Su predicts, that could pull the stock out of the doldrums and potentially drive it to the 52% gain that Kelleher anticipates. Regardless, this would be a good time for patient investors to open a small position in the stock.
Image source: Getty Images.
Uber Technologies: 55% implied upside
Uber is a leader in mobility and food delivery services. It operates the largest ride-sharing platform and second-largest restaurant food delivery service in the U.S. as measured by revenue. Uber also has the largest ride-sharing platform in nine other countries, and the largest food-delivery platform in seven countries.
The company has several important competitive advantages. First, its ability to offer mobility and delivery services through the same platform creates cost efficiencies through cross-selling opportunities. Second, its scale strengthens the network effect inherent to its business; the number of trips it facilitates is increasing more quickly than the number of people using the platform, which means users are engaging with the platform more frequently.
Uber reported solid financial results in the fourth quarter. Revenue increased 20% to $12 billion on strong sales growth in the mobility and delivery segments. Uber also reported a higher take rate in both segments, meaning it kept a larger percentage of every dollar spent on its platform. Meanwhile, adjusted EBITDA increased 44% to $1.8 billion.
Uber may not be a traditional AI stock, but CEO Dara Khosrowshahi told analysts on the latest earnings call that autonomous vehicle (AV) technology will be a $1 trillion opportunity for ride-sharing platforms. Uber is uniquely positioned to benefit given its unmatched scale. "Uber can deliver the lowest operational costs for our AV partners because we are leaps and bounds ahead on every aspect of go-to-market capabilities," he said.
Looking ahead, management estimates that adjusted EBITDA will increase at a compound annual percentage rate in the high 30s to 40 range over the next three years, which implies similar earnings growth. That forecast makes the stock's current valuation of 17 times earnings look cheap. The stock could gain 55% in the next year, as Mark Mahaney at Evercore expects, especially if Uber's partnership with Alphabet's Waymo continues to expand. Patient investors should feel confident buying a few shares today.
