Shares of Palantir Technologies (NASDAQ: PLTR) have surged 255% in the past year, elevating its market capitalization to approximately $200 billion. Nonetheless, numerous Wall Street analysts anticipate that Advanced Micro Devices (AMD -0.61%) and Uber Technologies (UBER 2.17%) will surpass this market cap within the next year. Among the predictions:
- Jim Kelleher from Argus Research has set a 12-month price target of $160 per share for AMD, representing a potential 52% increase from its current share price of about $105, which would lead to a $260 billion market cap for the company.
- Mark Mahaney at Evercore has projected a 12-month price target of $115 per share for Uber, suggesting a 55% upside from its current price of $74, resulting in a $240 billion market cap.
Here’s what investors need to understand about AMD and Uber.
Advanced Micro Devices: 52% Expected Gain
AMD develops chips targeting four main markets: data centers, client devices (laptops and desktops), video gaming consoles, and embedded processors. The company has made significant strides in gaining market share in central processing units (CPUs) within the client and data center sectors, while Intel has been losing market presence. However, AMD has struggled to capture market share from Nvidia in the graphics processing unit (GPU) and specialized chip markets like artificial intelligence (AI) accelerators.
While AMD shared robust financial outcomes for the fourth quarter, the market was underwhelmed as data center sales fell short of expectations. Total revenue rose 24% to $7.6 billion, with non-GAAP net income soaring 42% to $1.09 per diluted share. During the earnings call, CEO Lisa Su informed analysts that sales from AMD’s data center AI segment are expected to grow from $5 billion in 2024 to potentially “tens of billions of dollars in annual revenue in the coming years.”
Kelleher from Argus Research noted that “Gains in client and data center CPUs, leadership in console gaming, and a significantly improved embedded business all position AMD for long-term growth that exceeds its peer group.” He contended that AMD’s stock price does not fully reflect its long-term growth outlook, particularly as it continues to capture CPU market share from Intel and possibly take GPU market share from Nvidia.
Uber Technologies: 55% Expected Gain
Uber is a frontrunner in the mobility and food delivery sectors, operating the largest ride-sharing platform and the second-largest restaurant food delivery service in the U.S. based on revenue. Uber also leads in ride-sharing in nine other countries and food delivery in seven.
The company boasts several competitive advantages: its capacity to provide both mobility and delivery services via the same platform encourages cost efficiencies through cross-selling. Furthermore, its extensive scale bolsters the network effect of its business; the total number of trips being serviced is increasing more rapidly than the active users on the platform, indicating that users are engaging with the service more frequently.
Uber reported substantial fourth-quarter financial results, with revenue rising 20% to $12 billion driven by strong growth in mobility and delivery. The company also experienced an increase in its take rate across both segments, allowing it to retain a larger portion of consumer spending on its platform. Adjusted EBITDA grew 44% to $1.8 billion.
While Uber is not a conventional AI play, CEO Dara Khosrowshahi indicated in the recent earnings call that autonomous vehicle technology could represent a $1 trillion opportunity for ride-sharing services. Uber’s unmatched scale uniquely positions it to capitalize on this, as Khosrowshahi stated, “Uber can deliver the lowest operational costs for our AV partners.” Management expects adjusted EBITDA to grow at a compound annual growth rate in the high 30s to 40% over the next three years, reinforcing a similar growth outlook for earnings. This projection makes the current stock valuation of 17 times earnings appear attractive. A 55% increase in value over the next year, as forecasted by Mahaney at Evercore, seems plausible, especially with the potential expansion of Uber’s partnership with Alphabet‘s Waymo. Thus, prudent investors may find it beneficial to acquire shares now.
Suzanne Frey, an executive at Alphabet, serves on The Motley Fool’s board of directors. Trevor Jennewine holds positions in Nvidia and Palantir Technologies. The Motley Fool is invested in and endorses Advanced Micro Devices, Alphabet, Intel, Nvidia, Palantir Technologies, and Uber Technologies, and recommends options to short May 2025 $30 calls on Intel. The Motley Fool adheres to a disclosure policy.
