Wall Street analysts are still bullish on Nvidia and The Trade Desk.
Recent earnings reports from Microsoft and Alphabet suggest Nvidia is still on track for a strong year.
The Trade Desk's rare revenue miss last quarter is overshadowing its long-term opportunity in the growing connected TV advertising market.
The technology sector has produced some of the most rewarding growth stocks over the past four decades, and artificial intelligence (AI) promises to breed more wealth-building opportunities for investors.
The recent market sell-off sent shares of top tech stocks tumbling, but Wall Street analysts still have a buy rating on two high-growth companies, Nvidia(NASDAQ: NVDA) and The Trade Desk(NASDAQ: TTD). The consensus price target on these stocks suggests there could be significant upside from their discounted share prices. Here's why Wall Street might be on the money with these top tech stocks.
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1. Nvidia
Teaching computers to think for themselves requires powerful graphics processing units (GPUs). The demand for these chips has fueled impressive growth for a leading GPU designer, Nvidia. The average price target on Wall Street is currently 47% above Nvidia's current $111 share price.
Nvidia's revenue more than doubled last year to $130 billion, with sales to data centers making up 88% of that total. The consensus analyst estimate expects the company's revenue to climb to over $200 billion this year, driven by demand for new data center chips.
Demand for Nvidia's Blackwell computing system, which is designed for the most advanced AI workloads, is expected to be the main growth driver this year. "We've successfully ramped up the massive-scale production of Blackwell AI supercomputers, achieving billions of dollars in sales in its first quarter," CEO Jensen Huang said in the fiscal Q4 earnings report.
Image source: Nvidia.
Still, not every analyst on Wall Street is bullish. The chip industry is historically cyclical. Nvidia is highly dependent on large data center operators continuing to spend massive amounts of money on technology infrastructure, including buying more GPUs to power their servers. The uncertainty with the economy and concerns that data center operators will look for more cost-efficient ways to invest in AI infrastructure have sent Nvidia shares down this year.
But there's still no replacement for the computing power of Nvidia's GPUs. Two of Nvidia's largest customers, Microsoft and Alphabet's Google, just revealed in their first-quarter earnings reports that they plan to continue spending heavily on data center infrastructure this year, which is good news for Nvidia.
Given the continued investment in data centers, it's possible Nvidia shares could hit Wall Street's price target within the next year with still bigger gains to come over the long term. The stock trades at a reasonable 25 times this year's earnings estimate, which could support near-term upside for the shares.
2. The Trade Desk
The Trade Desk is a leading digital ad-buying platform that has delivered a nearly 1,700% return to investors since 2016. Despite a rare revenue miss for the company last quarter, Wall Street analysts remain bullish on its prospects with the average price target currently 64% above the current $53 share price.
The Trade Desk continued to outperform the growth of the digital ad market last quarter. It reported a 26% year-over-year increase in revenue, which it earns from charging a fee on ad spending and other services on its platform. This fee-based model is driving significant growth in profitability and cash flow, too.
However, revenue fell short of investor expectations, which triggered a sharp sell-off in the stock. Tariffs and the impact on the economy could lead to a soft ad market that could slow the company's growth, but the stock's recent correction seems to already reflect that possibility. The important question is, what's beyond 2025 for The Trade Desk?
The Trade Desk estimates its addressable market at $1 trillion. Total ad spending on its platform totaled just $12 billion in the last quarter, so it's got a long runway ahead. It's investing in AI to make its service even better. Its Kokai AI platform can help ad buyers simplify the process of finding the right ads to show an audience. Management expects all of its customers to be using Kokai by the end of 2025.
With such a huge opportunity still ahead, the stock could be a compelling buy at these lower share prices. Current Wall Street estimates have revenue growing 17% for 2025, while improving margins set the stage for robust earnings growth in the coming years that could fuel significant returns for investors.
It's difficult to say whether the stock will hit the Street's price target this year, given the uncertainty in the ad market. But the stock was expensive heading into 2025, and it's now priced at a fair 30 times this year's earnings projection. This could be as cheap as the stock gets, giving long-term investors a great opportunity to buy a top growth stock on sale.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Ballard has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Microsoft, Nvidia, and The Trade Desk. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
