Concerns about the steep valuations ofartificial intelligence (AI) stocks and a questionable outlook for an interest
rate cut in December weighed on investor sentiment in recent trading sessions.
For now, however, Nvidia’ssolid earnings last week seemed to undermine the idea that everything tied to
AI investment is in a bubble.
Investors looking to capitalize on therecent selloff and pick up some attractive stocks for the long term can track
the recommendations of top Wall Street analysts. These experts can help provide
key insights into a company’s growth potential.
Here are three stocks favored by theStreet’s top pros, according to TipRanks, a platform that ranks analysts
based on their past performance.
Microsoft
Recently, Baird analyst William Powerinitiated coverage on Microsoft with a buy rating and a pricetarget of $600. TipRanks’ AI Analyst is also optimistic on MSFT, giving itan “outperform” rating and a price target of $628.
“Microsoft is leading the AI revolutionwith infrastructure and applications, aided by its OpenAI relationship,
providing an end-to-end AI platform for enterprises and consumers alike,” said
Power, explaining his optimism.
Power sees MSFT’s partnership with ChatGPTparent OpenAI as a key differentiator, helping it run AI at scale and speed.
The 5-star analyst said that after a commitment to invest $13 billion,
Microsoft recently announced an incremental$250 billion Azure investment over several years.
The analyst discussed the impressive growthin MSFT’s total revenue and Azure business in the September quarter, with the
cloud business now constituting 60% of the overall top line. Power also
highlighted the strength in Microsoft’s core applications, including Microsoft
365, LinkedIn and Dynamics. He noted that MSFT’s revenue growth in Q1 FY26 was
accompanied by a solid operating margin of 49% and free cash flow margin of
33%. Microsoft’s strong margins are ensuring continued double-digit EPS growth,
he said.
Power believes in Microsoft’s near- andlong-term potential, despite any immediate pressure stemming from AI capital
spending concerns.
Power ranks No. 287 among more than 10,100analysts tracked by TipRanks. His ratings have been successful 57% of the time,
delivering an average return of 17%. See Microsoft Ownership Structure on
TipRanks.
Booking Holdings
Online travel agent (OTA) Booking Holdings (BKNG) isanother pick this week. The Priceline and Kayak owner posted impressive
third-quarter results, with double-digit gains in gross bookings and revenue.
Impressed by the Q3 performance andattractive valuation, Wedbush analyst Scott Devitt upgraded BKNG to buy from
hold with a price targe of $6,000. By comparison, TipRanks’ AI Analysthas a “neutral” rating on Booking Holdings with a price target of $5,406.
“Booking remains the best-positioned OTA inour view,” benefiting from several positives, from the company’s scale and
diversification to solid liquidity to free cash flow conversion, Devitt said.
The top-rated analyst also notedmanagement’s impressive history of successfully executing major strategic
initiatives. Devitt highlighted Booking Holdings’ widening market share in
alternative lodging while optimizing costs and driving efficiencies. The
company’s cost savings are supporting reinvestment in growth initiatives to
achieve longer-term targets, he said.
Additionally, Devitt discussed Booking’simpressive growth across key metrics in the third quarter amid
better-than-anticipated global travel demand. Third-quarter gross bookings
growth of 14% surpassed management’s guidance by 400 basis points, the analyst
said. ASs a result, Devitt raised his 2025 gross bookings growth estimate by
100 basis points from his prior forecast, to 11.5%. Further, he expects BKNG to
report adjusted EBITDA of $9.8 billion, reflecting year-over-year margin
expansion of about 180 basis points.
Devitt ranks No. 660 among more than 10,100analysts tracked by TipRanks. His ratings have been profitable 50% of the time,
delivering an average return of 12.3%. See Booking Holdings Financials on
TipRanks.
DoorDash
Devitt also upgraded his rating for fooddelivery platform DoorDash (DASH) to buyfrom hold with a price target of $260. TipRanks’ AI Analyst rates DoorDash“neutral” with a price target of $211.
DASH shares took a hit when the companyannounced mixed third-quarter results and said it expects to spend “several
hundred million dollars” on new initiatives and development in 2026.
Devitt believes that the pullback in DASHshares presents an attractive risk/reward opportunity, with the stock now
trading at about 17.7x his 2027 adjusted EBITDA estimate. The Wedbush analyst
noted that the post earnings selloff was mainly due to concerns about the level
of capital spending and pressured profit margins.
Devitt admits that the higher level ofspending will hurt near-term margins, but argues such investments in growth
initiatives are warranted given that they’ll expand DASH’s addressable market
and bolster its product offerings.
Specifically, Devitt highlightedmanagement’s plans to direct incremental investments toward three key areas:
”(1) creating a cohesive global tech platform, (2) building new verticals and
products, and (3) scaling geographic expansion.”
Overall, Devitt is bullish on DoorDash,believing it has held a dominant position in the U.S. food delivery sector.
Moreover, he noted the company’s solid execution across strategic initiatives
as management pushes for long-term sustainable growth. See DoorDash Hedge Fund
Activity on TipRanks.