Macroeconomic uncertainty and potential policy changes under the administration of President-elect Donald Trump have driven the stock market to new heights the past four weeks. But investors stand to benefit if they ignore short-term noise to focus instead on companies that can navigate challenges and deliver solid returns over the long term.
Top Wall Street analysts look to pick stocks of companies that are backed by strong financials, reliable business models and that boast attractive product offerings.
With that in mind, here are three stocks favored by the Street’s top pros, according to TipRanks, a platform that ranks analysts based on their past performance.
ServiceNow
This week’s first pick is artificial intelligence-enabled workflow automation software company ServiceNow (NOW). The company’s third-quarter results topped analysts’ expectations, thanks to AI-related tailwinds.
Following a virtual fireside chat with ServiceNow’s CFO Gina Mastantuono, Mizuho analyst Gregg Moskowitz reiterated a buy rating on NOW stock. The analyst also raised the price target to $1,070 from $980 to account for the rise in comparative valuation multiples.
The analyst said management is confident of ServiceNow’s near-term (Q4) and medium-term (2026) outlook and believes the company is well-positioned for durable growth. In particular, management touted robust demand that’s building generative AI-led momentum for ServiceNow’s Pro Plus SKU offering.
Additionally, Moskowitz highlighted the company’s excitement about the growth potential of its new Workflow Data Fabric product, which unifies business and technology data across an enterprise and will power new workflows and AI agents. The company expects this new product will double its total addressable market to $500 billion and drive additional monetization.
“We continue to believe that NOW remains very well-positioned for high growth over the next few years, fueled by ongoing demand for workflow automation, strong cross-sell opportunities and AI monetization,” said Moskowitz.
Moskowitz ranks No. 221 among more than 9,100 analysts tracked by TipRanks. His ratings have been profitable 61% of the time, delivering an average return of 14.6%. See ServiceNow Insider Trading Activity on TipRanks.
Snowflake
Next is Snowflake (SNOW), a data analytics software provider. Shares of the company soared nearly 33% on November 21 as investors cheered its better-than-anticipated third-quarter results.
Impressed by the Q3 performance, TD Cowen analyst Derrick Wood reaffirmed a buy rating on SNOW and increased his 12-month price target to $190 from $180. The analyst found that the company’s performance was uniformly impressive, and said the quarter marked a turning point in Snowflake’s growth story.
Wood noted the key drivers behind Q3 results included benefits from changes in Snowflake’s go-to-market (GTM) strategy, lower-than-expected storage headwinds as traction in new data engineering services more than offset migrations in the Iceberg product and early traction in Cortex AI services.
The analyst also mentioned strength in Snowflake winning large deals, including the signing of three $50 million contracts in the third quarter, and bullish commentary on the Q4 large deals pipeline.
Wood is bullish about the outlook for Snowflake, given increased stability in its core data warehousing consumption growth. That growth was reflected in net retention rate (NRR) trends and “early traction with new AI workloads, esp. Dynamic Tables.”
Wood ranks No. 80 among more than 9,100 analysts tracked by TipRanks. His ratings have been successful 66% of the time, delivering an average return of 18.1%. See SNOW Stock Charts on TipRanks.
Twilio
This week’s third pick is Twilio (TWLO), a cloud communications platform. The company impressed investors with its market-beating third-quarter results and raised full-year revenue outlook. San Francisco-based Twilio attributed Q3 performance to its financial discipline and innovation.
Impressed with the rebound in the business, Monness analyst Brian White upgraded TWLO stock to a buy from a hold with a price target of $135.
White noted that the company’s digital platform saw solid demand during the pandemic, with its stock price touching an all-time high in early 2021. But following the reopening of the economy, Twilio’s growth rate decelerated to 4% in Q1 2024 from a peak of 67% in Q2 2021 and it faced a bloated cost structure.
That said, White argued that after eleven consecutive quarters of slower revenue growth, Twilio’s top line saw modest acceleration in Q2 2024 and more visible improvement in Q3 2024. The analyst also noted the rise in TWLO’s operating margin, thanks to the company’s cost containment and efficiency measures as well as divestitures.
White is confident in Twilio’s ability to combine communications with contextual data and AI. “Heading into 2025, we believe Twilio is on course to extend this recovery, and the stock’s valuation remains attractive,” he concluded.
White ranks No. 44 among more than 9,100 analysts tracked by TipRanks. His ratings have been profitable 69% of the time, delivering an average return of 20.4%. See Twilio Financial Statements on TipRanks.
This post was originally published on CNBC Markets
