Tired of hearing investors and analysts gush over Nvidia stock? It's definitely a popular S&P 500 stock, but by no means the favorite.
Nine stocks, including industrial Delta Air Lines, energy firm Targa Resources and consumer discretionary Amazon.com, carry a higher percentage of analysts' buy ratings than Nvidia does, says FactSet. And that's an important shift now that shares of Nvidia rallied nearly 80% this year as enthusiasm over AI hits a fever pitch.
"The term 'AI' was mentioned more than 50 times on the earnings calls of nine S&P 500 companies, led by Nvidia at 114," says John Butters of FactSet.
Gearing Up For First-Quarter Profit
Analysts are already jockeying for where to find the market's new opportunities. With the S&P 500 up nearly 10% for the year, analysts are starting to pinpoint favorite stocks in less obvious places.
And that's as the first quarter proves to be pivotal to justify skyrocketing S&P 500 values. Analysts are calling for S&P 500 earnings to rise 3.3% in the first quarter, Butters says. And if that materializes, it would mark the third-straight quarter of year-over-profit earnings growth, he says.
But analysts have their favorites for stock gains.
Finding The Favorites In The S&P 500
Analysts are generally bullish on S&P 500 stocks at large. But they're slightly less bullish than normal right now.
Among the 11,557 ratings on S&P 500 stocks, 53.8% of them are buy ratings, Butters says. That's means they're slightly more cautious than normal. The percentage of ratings that are buys reached 54.4% over the past five years on average.
Energy is the S&P 500 sector analysts are most bullish on. The number of buy ratings is 63%. And that's tied with communication services, another popular sector.
And the most popular S&P 500 stocks reflect this sector optimism. Targa Resources, a Houston-based oil and gas supply company, is called rated a buy 95% of the time by analysts. That tops even Nvidia which is rated a buy by 90% of analysts. Additionally, just 5% of ratings on the energy company are a hold and 0% are a sell. And that's despite the stock already being up more than 22% this year.
Buy These S&P 500 Stocks?
What's the S&P 500 company with the most buy ratings? That goes to Delta Air Lines. All told, 96% of the ratings on the airline stock are buys and just 4% are a hold. Shares are up 7.3%, trailing the S&P 500 slightly. But analysts remain bullish, saying that its earnings per share will rise nearly 4%.
That's not to say analysts don't like Nvidia. It's just they like other Magnificent Seven's prospects better. For instance, 95% of all the ratings on Amazon.com are buys. The stock is up 15.2% this year to 175.07. But analysts think it should be worth 204.98 in 12 months. That's roughly 17% potential upside still. Contrast that with Nvidia, which analysts think is already just 3% away from its 12-month price target.
Do analysts' favorite S&P 500 always pan out? Absolutely not. But if they're wrong on these S&P 500 stocks, they're really wrong.
Analysts' Biggest Buy Recommendations
| Company | Symbol | Buy | Hold | Sell | YTD | Sector |
|---|---|---|---|---|---|---|
| Delta Air Lines | 96% | 4% | 0% | 7.2% | Industrials | |
| Targa Resources | 95% | 5% | 0% | 22.0% | Energy | |
| Amazon.com | 95% | 5% | 0% | 14.7% | Consumer Discretionary | |
| Microsoft | 95% | 5% | 0% | 10.7% | Information Technology | |
| Schlumberger | 94% | 6% | 0% | 1.7% | Energy | |
| Lamb Weston Holdings | 93% | 7% | 0% | -5.7% | Consumer Staples | |
| Alexandria Real Estate Equities | 92% | 8% | 0% | -2.3% | Real Estate | |
| NiSource | 92% | 8% | 0% | -0.2% | Utilities | |
| Uber Technologies | 90% | 10% | 0% | 23.6% | Industrials | |
| Nvidia | 90% | 10% | 0% | 77.3% | Information Technology |
