One of the top stock picks recommended by Wall Street analysts is Google parent Alphabet (GOOGL). This tech giant recently reported its second-quarter results, revealing the strength in its Search and Cloud businesses. However, the growth in YouTube advertising revenue slowed down in the quarter and missed analysts’ expectations. Despite this, BMO Capital analyst Brian Pitz reiterated a buy rating on GOOGL stock with a price target of $222. Pitz highlighted the artificial intelligence-related tailwinds in Alphabet’s Search business, emphasizing that the combination of higher query volume and lower incremental costs implies that AI benefits to Search will be a multi-year event. Additionally, Pitz raised his 2024 and 2025 estimates for the Cloud business to reflect AI-led gains. Even with YouTube’s revenue miss, Pitz remains confident in this business, expecting it to benefit from the shift in a significant portion of global TV ad dollars to the digital world. He also believes that YouTube’s superior AI Creator tools will further boost its prospects in the future.
ServiceNow (NOW)
Another stock favored by analysts is ServiceNow (NOW), a cloud-based software company that recently impressed investors with its strong results for the second quarter. The workflow automation platform saw better-than-expected net new annual contract value and generative AI contributions. Goldman Sachs analyst Kash Rangan increased the price target for NOW stock to $940 from $910 and maintained a buy rating following the positive results and guidance. Rangan pointed out the 22.5% growth at constant currency in ServiceNow’s current remaining performance obligation, an indicator of future revenue generation, driven by robust NNACV and early renewals. He expressed optimism about the company’s ability to sustain a growth rate of more than 20%, supported by continued AI momentum and an accelerating backlog.
Travel + Leisure (TNL)
The third stock on analysts’ top picks list is Travel + Leisure (TNL), a membership and leisure travel company that exceeded earnings expectations for the second quarter but missed revenue estimates. Despite this, the company raised its full-year adjusted earnings guidance, showcasing strong consumer demand for vacation ownership. Tigress Financial analyst Ivan Feinseth reaffirmed a buy rating on TNL stock and raised his price target to $58. Feinseth’s bullish outlook is driven by the demand for vacation ownership, along with expectations of benefiting from lower interest rates and additional rate cuts. He foresees TNL’s revenue and cash flows being fueled by various revenue streams, including property development, membership sales, and increased fees. Feinseth also believes in the growth catalysts provided by strategic partnerships, technology investments, marketing deals, and recent acquisitions.
Investors should exercise caution when considering these top stock picks highlighted by Wall Street analysts. While these recommendations provide insights into companies’ potential long-term growth, it is crucial to conduct thorough research and analysis before making any investment decisions. Remember that the stock market is volatile, and investments should be well-informed and based on a comprehensive understanding of the company’s fundamentals and market trends.