Analysts love growth stocks, especially those that continue to register strong earnings growth and dominate the markets in which they compete. In fact, I discuss a few of them below.
For investors, it’s helpful to pay attention to what those analysts have to say, and how they rate the stock they cover. After all, with the market rally of the past year cooling, analyst ratings can become even more important to investors who are trying to sift through their available options and figure out which securities are worth their capital.
Advanced Micro Devices (AMD)
Growth stocks, like Advanced Micro Devices (NASDAQ:AMD) currently have a “strong buy” rating among 36 analysts who track the stock. Additionally, the median price target on AMD stock is 18% higher than where the shares are currently trading. The strong endorsement comes despite AMD’s share price having risen 116% in the last 12 months.
AMD reported earnings per share (EPS) of 77 cents, which matched the consensus expectation of analysts. Revenue totaled $6.17 billion, which topped the $6.12 billion that was forecast on Wall Street. However, what got analysts really excited was the bullish update on its artificial intelligence (AI) chips sales. Last fall, AMD said it expected $2 billion in AI chip sales in 2024. The company upped that forecast to $3.50 billion of AI chip sales this year as demand strengthens.
Meta Platforms (META)
We can also look at growth stocks, like Meta Platforms (NASDAQ:META), which just posted blowout Q4 2023 earnings, announced its first-ever dividend payment, and implemented a new $50 billion stock buyback program.
Helping, analysts at Bernstein lifted their price target on META stock to $435 from $375. The firm noted META is a standout AI winner. Better, Meta Platforms stock has a strong buy rating among 47 analysts that cover the company.
META stock has been on a tear amid the current stock market rally. In the last 12 months, the company’s share price has increased 174%, including a 36% increase so far this year. Analysts and investors love the cost controls of the company as well as its push into AI. In addition, the company is also benefitting from a rebound in online advertising that has taken hold.
Walmart (WMT)
There are also growth stocks, like Walmart (NYSE:WMT), which might not be the first company that comes to mind when people think of a growth stock. But the company has been doing very well lately, earning a strong buy rating from 33 analysts.
Walmart just reported strong financial results for Q4 of last year due largely to a 23% surge in its e-commerce sales during the holidays. Even better, global e-commerce sales passed $100 billion for the first time. In the U.S., e-commerce sales rose 17% year-over-year as shoppers chose to get orders delivered to their homes at Christmas.
The company also announced a 3-for-1 stock split as its shares trade at an all-time high.
Applied Materials (AMAT)
Another one of the top growth stocks, which also earned a strong buy rating is Applied Materials (NASDAQ:AMAT). The company, which makes equipment used to manufacture microchips and semiconductors, recently issued solid earnings.
In its most recent quarter, AMAT posted EPS of $2.13, which beat estimates of $1.90. Revenue for the final quarter of last year came in at $6.71 billion, which beat expectations of $6.48 billion.
In terms of guidance, Applied Materials forecast a range of potential revenue for the current first quarter of 2024, with a midpoint of $6.50 billion. The revenue guidance was ahead of Wall Street views that called for $6.34 billion. On an earnings call, company executives said that their chip equipment business will grow fast in coming quarters because of demand for advanced chips that power AI applications. AMAT stock has increased 70% in the last 12 months and is up 23% year to date.
Microsoft (MSFT)
Now the world’s most valuable publicly traded company with a $3 trillion market cap, Microsoft (NASDAQ:MSFT) has strong buy ratings attached to it.
The tech giant’s ambitions in AI and its strength in cloud computing are powering it to new heights. Microsoft reported Q4 EPS of $2.93, as compared to expectations of $2.78. Revenue came in at $62.02 billion compared to estimates of $61.12 billion. Sales rose 17.6% year-over-year.
The results were driven largely by the company’s cloud computing segment, with its Intelligent Cloud unit posting $25.88 billion in revenue, up 20% from a year ago.
The number of commitments to spend more than $1 billion on Azure cloud services in the year ahead increased during the quarter, Microsoft said. In terms of forward guidance, Microsoft said it expects revenue of $60 billion to $61 billion for the current quarter. Analysts expected Q1 revenue of $60.93 billion. MSFT stock is up 60% in the last 12 months.
Spotify Technology (SPOT)
Audio streaming giant Spotify Technology (NYSE:SPOT) won over analysts and achieved a strong buy rating thanks to its aggressive growth and dominance of music and podcasts. The company’s latest earnings print was extremely strong and showed continued rapid growth.
SPOT posted a Q4 loss of 36 cents on revenue of $3.94 billion. The profit was better than a loss of 40 cents that was expected on Wall Street. Analysts had forecast revenue of $3.99 billion.
Spotify reported that its monthly active users grew 5% from the previous quarter to 602 million, exceeding analysts’ forecasts of 601 million users. The number of subscribers to Spotify’s premium service rose 4% to 236 million, which was also above Wall Street forecasts of 235 million. The company said that it expects monthly active users to reach 618 million worldwide in the current first quarter, with premium subscribers hitting 239 million. SPOT stock has doubled in the last 12 months.
Eli Lilly (LLY)
Pharmaceutical company Eli Lilly (NYSE:LLY) looks like an unstoppable growth stock thanks to the success of its weight loss drug. At the moment, about 24 analysts rate its shares as a strong buy. And no wonder. Sales of the company’s weight loss drug called Zepbound are soaring, boosting its earnings in the process. Eli Lilly recently announced Q4 2023 financial results that blew past Wall Street estimates. LLY stock has increased 130% in the past 12 months.
Eli Lilly reported Q4 EPS of $2.49, which was well ahead of the $2.22 expected by analysts. Revenue in the final three months of last year totaled $9.35 billion compared to $8.93 billion that was forecast on Wall Street. Sales were up 28% from a year ago. The quarterly results were the first to include sales of Zepbound, which some analysts say could post more than $1 billion in sales in its first year on the market. Eli Lilly is also getting a boost from its diabetes drug Mounjaro, which also helps people to lose weight.
On the date of publication, Joel Baglole held long positions in MSFT, AMAT and LLY. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
