Recent concerns over inflated valuations of AI-related stocks and uncertainty around potential December rate cuts have weighed on investor sentiment. However, Nvidia's solid earnings report last week has partially dispelled fears of an AI investment bubble. For investors looking to capitalize on recent market pullbacks and identify attractive long-term opportunities, recommendations from top Wall Street analysts are worth noting. Based on rankings from platforms that evaluate analyst performance, three leading analysts have expressed strong optimism for these three stocks.
Microsoft (MSFT.US), known for its Windows and Xbox platforms, is viewed as a key beneficiary of the AI wave. The company recently reported better-than-expected Q1 FY2026 results, with Azure cloud revenue growing 40%. Baird analyst William Power initiated coverage with an "Outperform" rating and a $600 price target. TipRanks' AI analyst also maintains a bullish stance, assigning a "Buy" rating with a $628 target. Power highlighted Microsoft's infrastructure, applications, and OpenAI partnership as critical differentiators, enabling it to lead the AI revolution with an end-to-end platform. He noted Microsoft's $130 billion commitment to OpenAI and an additional $250 billion planned Azure investment. Despite short-term pressure from AI-related capital expenditures, Power remains confident in Microsoft's growth trajectory, citing robust 49% operating margins and 33% free cash flow margins in Q1 FY2026.
Booking Holdings (BKNG.US), the parent company of Priceline and Kayak, delivered impressive Q3 results with double-digit growth in bookings and revenue. Wedbush analyst Scott Devitt upgraded the stock from "Neutral" to "Outperform" with a $6,000 target, citing its dominant position in online travel and attractive valuation. TipRanks' AI analyst rates it "Neutral" with a $5,406 target. Devitt emphasized Booking's scale, diversified portfolio, strong liquidity, and free cash flow conversion. He also praised management's execution in cost optimization and market share gains in alternative accommodations. With global travel demand exceeding expectations, Q3 bookings grew 14%, beating guidance by 400 basis points. Devitt raised his 2025 bookings growth forecast to 11.5% and projects adjusted EBITDA of $9.8 billion, reflecting 180 bps margin expansion.
DoorDash (DASH.US) saw its stock decline after mixed Q3 results and plans to invest "hundreds of millions" in new initiatives by 2026. Devitt upgraded the food delivery platform from "Neutral" to "Outperform" with a $260 target (TipRanks: "Neutral," $211 target), viewing the pullback as an attractive risk/reward opportunity. While higher spending may pressure near-term margins, Devitt believes investments in global tech platform development, new verticals, and geographic expansion will expand DoorDash's addressable market. He maintains optimism about its U.S. market leadership and management's disciplined execution of long-term growth strategies.
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