Which growth stock is the best choice?

Several growth companies have come under pressure from macro headwinds, including steep borrowing costs and high inflation. The upcoming interest rate cut by the Federal Reserve is expected to drive growth stocks higher, as these stocks tend to perform well in a low-interest environment. With that background in mind, we used the TipRanks Stock Comparison Tool to pit Tesla ( TSLA ), Advanced Micro Devices ( AMD ), and Palantir ( PLTR ) against each other to pick the best growth stock, according to analysts at on Wall Street.

Tesla (NASDAQ:TSLA)

Shares of electric vehicle (EV) maker Tesla are up 5% in the past month, but are still down about 9% year to date. Slowing electric vehicle demand in key markets, growing competition and the impact of price cuts on the company’s margins have weighed on investor sentiment toward Tesla stock.

Tesla’s auto revenue fell 7 percent in the second quarter, reflecting lower deliveries amid macro pressures and intense rivalry in the electric vehicle market. Moreover, the company’s adjusted earnings per share (EPS) fell 43% to $0.52, reflecting continued margin pressures.

All eyes are on the company’s third-quarter deliveries, which could be a major catalyst for the stock. Furthermore, the Robotaxi event expected to take place in October could also help improve investor sentiment towards Tesla stock.

What is the price target for Tesla stock?

Wolfe Research analyst Emmanuel Rosner recently assumed coverage of Tesla with a Hold rating. Rosner believes that the fundamental setup for the electric vehicle maker looks constructive over the next few months, with second-half deliveries following a 12% increase from the first half of 2024. He explained that this growth is driven by increased demand in China and from the rest. of the world.

Rosner also sees tailwinds for the company’s automotive gross margins from lower material costs, lower Cybertruck losses and improved fixed cost leverage that could more than offset the impact of the cuts of prices.

Overall, Wall Street has a consensus rating of Hold on Tesla stock, based on 12 Buys, 16 Holds and eight Sells. TSLA stock’s average price target of $208.98 indicates a potential downside of 8% from current levels.

See more TSLA analyst ratings

Advanced Micro Devices (NASDAQ:AMD)

Shares of semiconductor giant Advanced Micro Devices are up just 3.2% so far in 2022, compared with a 136% rise in rival Nvidia (NVDA). Nvidia’s advanced GPUs (graphics processing units) have witnessed strong demand due to the ongoing generative artificial intelligence (AI) wave.

While AMD has outpaced Nvidia so far in the AI ​​race, several analysts are optimistic about the company’s ability to capture opportunities in the generative AI space with its MI300X AI chip and other innovations. During the Q2 earnings call, AMD CEO Lisa Su told investors that the company is seeing higher-than-anticipated demand for its AI chips. In addition, MI300 chip revenue exceeded $1 billion in the second quarter.

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As a result, AMD raised its GPU data center revenue guidance to more than $4.5 billion for 2024, up from the $4 billion it targeted in April. In addition, the recovery of the PC market from the post-pandemic slump is expected to increase demand for AMD processors.

Is AMD stock a buy or sell?

At the recent Communacopia + Technology conference, Goldman Sachs analyst Toshiya Hari discussed the market outlook and the company’s strategy in various key markets with AMD CEO Dr. Lisa Su.

In AI, Su highlighted AMD’s progress in ROCm software development and solid demand environment. Beyond AI, Su had a “constructive tone” on the recovery in the server CPU market and the company’s ability to gain additional share, particularly in the Enterprise market. The CEO noted that Enterprise customers increasingly see AMD as a trusted partner not only in server CPUs, but also in a wide range of solutions, including data center GPUs and commercial PC CPUs .

Based on the discussion, Hari reiterated a buy rating on AMD stock with a price target of $175.

Overall, shares of Advanced Micro Devices have a consensus rating of Strong Buy based on 26 buy ratings against six hold ratings. AMD’s average stock price target of $190.25 implies a potential upside of 25.1%.

See more AMD analyst ratings

Palantir Technologies (NASDAQ:PLTR)

Shares of Palantir surged more than 111%, driven by the company’s strong financials, optimism about the company’s artificial intelligence platform (AIP) and the stock’s inclusion in the S&P 500 ( SPX ).

The second quarter of 2024 marked the seventh consecutive quarter of GAAP profitability for Palantir. The company’s Q2 revenue rose 27% year-over-year to $678 million, with customer base growing 41% to 593 customers. Moreover, adjusted EPS increased 80% to $0.09 due to higher revenue and operating margin expansion.

With strong Q2 results and AI-driven generative demand for its software, the company raised its annual revenue guidance for the second time this year.

Is PLTR stock a good buy?

Citi analyst Tyler Radke reaffirmed a Hold rating on Palantir stock with a $30 price target following a meeting with Palantir CFO Dave Glazer. The analyst noted that the company is optimistic about the momentum from its AIP offering. He also highlighted the large DoD (Department of Defense) deal that closed last quarter and helped improve the USG (US Government) growth trend in the second half of the year.

Despite these positives, Radke remains bullish on PLTR due to its steep valuation following the rise after the stock’s inclusion in the S&P 500. The analyst also believes that AIP’s monetization is still in its early stages despite strong bookings seen in the commercial business . He also expects a “bulky” government business heading into the election.

Overall, Wall Street has a consensus rating of Hold on Palantir stock based on four Buys, five Holds and six Sells. PLTR’s average price target of $27.08 indicates a potential downside of 25.4%.

See more PLTR analyst ratings

Conclusion

Wall Street is extremely bullish on AMD stock, but is being sidelined by Tesla and Palantir shares. Analysts see more upside potential in AMD stock compared to the other two growth stocks. Several analysts are optimistic about AMD’s ability to capture the generative demand for advanced AI chips through continued innovation and strong execution.

Disclosure