Uber stock surged while Amazon flopped following the company's respective second-quarter earnings reports earlier this month. But at least one team of analysts sees strong upside for both stocks following the most recent round of earnings.
With second quarter earnings out of the way, Bernstein analysts cited several tech stocks with upside to their estimated value.
Uber led the list, as its stock closed trading Wednesday 32% below the price target of 95 set by Bernstein analysts. Amazon made the list as well. The tech giant's stock is trading 24% below Bernstein's price target of 210 as of market close Wednesday.
On the stock market today, Uber stock is up 1.5% at 72.96. Shares have formed a long consolidation pattern with a buy point of 82.14, according to IBD MarketSurge.
Meanwhile, Amazon stock is up 4% at 176.65, following a stronger-than-expected U.S. retail sales report for July. Shares moved ahead of Amazon stock's 21-day line but are still trading below the 50-day moving average.
Analyst Sees Earnings Inflection For Uber Stock
Uber stock gained 11% last Tuesday, following a strong Q2 report that showed a return to quarterly profits and its fastest pace of revenue growth in more than a year.
"Uber is in the midst of a material inflection in earnings and free cash flow, making it our top pick in U.S. Emerging Internet (category)," Bernstein analysts led by Nikhil Devnani wrote Thursday. "Alongside an improving margin profile, Uber has continued to invest into new products and markets, building on its market leadership position and contributing to healthy Gross Bookings growth."
Uber's Q2 gross bookings grew 19% year-over-year to $40 billion. Bookings include fares charged, as well as food deliveries and other services.
Despite its post-earnings rally, Uber stock is still down about 12% from a high point after its analyst day in February. "The recent pullback in the stock has created a favorable, 'growth at a reasonable price' entry point, in our view," the Bernstein report added.
Uber stock has been weighed down by concerns about the broader economy and regulation. Some investors worry that Tesla 'S robotaxi vision could mean a new competitive threat. A legal win in California and strong bookings growth in its most recent report likely helped alleviate the first two concerns, Bernstein analysts wrote.
"Tesla's robotaxi event on (Oct. 10) could be the next clearing event, as we think the transition to autonomous vehicles will take time," Bernstein added.
Chief Executive Dara Khosrowshahi addressed the robotaxi concerns remarks to analysts following Uber's Q2 report.
"Put simply, Uber is uniquely positioned to offer tremendous value for AV players looking to deploy their technology at scale," Khosrowshahi told analysts. "While the operation of a ride-hail network may seem simple, our technology obscures a huge amount of complexity."
Amazon Stock: Following Meta's Lead?
Meanwhile, Amazon saw its stock fall 9% on Friday, Aug. 2, following its second quarter report. The tech giant reported lower-than-expected sales for the second quarter. Company leaders also told analysts that Amazon plans to increase spending on AI-related infrastructure for its Amazon Web Services cloud division.
Shares dropped an additional 4% on Aug. 5 amid a broader tech sell-off that day. Amazon stock has slowly edged up since then. But shares closed Wednesday down more than 15% from a record high of 201.20 reached in early July.
Bernstein's analysts noted that Facebook parent company Meta suffered a similar decline following its first quarter report in April before the stock came surging back.
"And just like Meta's sell-off post 1Q24, we believe Amazon's recent stock pullback offers a decent entry point with the fundamental story just as strong as pre-earnings, albeit with expectations reset lower," the Bernstein note said.
The Bernstein analysts expect continued strong growth for Amazon's operating income and free cash flow.
"The operating income inflection story remains intact with further contribution from robust Amazon Web Services growth, advertising re-acceleration in (second half of 2024) from Prime Video ad ramp, and steady retail margin expansion while prioritizing gross profits," the note said.
Broadcom And Dell Also On List
The Bernstein list also noted that Dell Technologies is trading more than 50% below the analysts' target price, while Broadcom stock was 24% below Bernstein's target price as of market close Wednesday.
