Several growth companies have been under pressure due to the impact of macro headwinds, including steep borrowing costs and high inflation. The Federal Reserve’s upcoming interest rate cut is expected to drive growth stocks higher, as these stocks tend to perform well in a low-interest rate environment. With this backdrop in mind, we used TipRanks’ Stock Comparison Tool to place Tesla (TSLA), Advanced Micro Devices (AMD), and Palantir (PLTR) against each other to pick the best growth stock, according to Wall Street analysts.
Tesla (NASDAQ:TSLA)
Shares of electric vehicle (EV) maker Tesla have advanced 5% over the past month but are still down about 9% year-to-date. Slowing EV demand in key markets, rising competition, and the impact of price cuts on the company’s margins have weighed on investor sentiment on Tesla stock.
Tesla’s automotive revenue declined 7% in the second quarter, reflecting lower deliveries amid macro pressures and intense rivalry in the EV market. Moreover, the company’s adjusted earnings per share (EPS) plunged 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. Further, the Robotaxi event expected to be held in October could also help in improving investor sentiment about Tesla stock.
What Is the Target Price for Tesla Stock?
Recently, Wolfe Research analyst Emmanuel Rosner assumed coverage of Tesla with a Hold rating. Rosner feels that the fundamental setup for the EV maker seems constructive over the next few months, with second-half deliveries tracking up 12% compared to the first half of 2024. He explained that this growth is driven by improved demand in China and the rest of the world.
Rosner also sees tailwinds to the company’s auto gross margins due to a reduction in material costs, lower Cybertruck losses, and an improvement in fixed cost leverage that could more than offset the impact of price cuts.
Overall, Wall Street has a Hold consensus rating on Tesla stock based on 12 Buys, 16 Holds, and eight Sells. The average TSLA stock price target of $208.98 indicates a possible downside of 8% from current levels.
Advanced Micro Devices (NASDAQ:AMD)
Shares of semiconductor giant Advanced Micro Devices have risen only 3.2% so far in 2022 compared to the 136% rally in rival Nvidia’s (NVDA) stock. Nvidia’s advanced GPUs (graphics processing units) have been witnessing robust demand due to the ongoing generative artificial intelligence (AI) wave.
While AMD has lagged Nvidia so far in the AI race, several analysts are optimistic about the company’s ability to capture the 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 was seeing higher-than-anticipated demand for its AI chips. Moreover, revenue from the MI300 chips surpassed $1 billion during the second quarter.
Consequently, AMD raised its data center GPU revenue guidance to more than $4.5 billion for 2024, up from the $4 billion guided in April. Additionally, the recovery in the PC market from the post-pandemic slump is expected to drive the demand for AMD’s CPUs higher.
Is AMD Stock a Buy or Sell?
At the recently held Communacopia + Technology Conference, Goldman Sachs analyst Toshiya Hari discussed with AMD’s CEO, Dr. Lisa Su, the market outlook and the company’s strategy across various key markets.
In AI, Su highlighted AMD’s progress in advancing its software ROCm and the solid demand environment. Beyond AI, Su had a “constructive tone” with regard to 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 are increasingly seeing AMD as a trusted partner not only in server CPU, but also across an extensive range of solutions, including data center GPU and commercial PC CPU.
Based on the discussions, Hari reiterated a Buy rating on AMD stock with a price target of $175.
Overall, Advanced Micro Devices stock scores a Strong Buy consensus rating based on 26 Buys versus six Hold ratings. The average AMD stock price target of $190.25 implies 25.1% upside potential.
Palantir Technologies (NASDAQ:PLTR)
Palantir shares have rallied more than 111%, driven by the company’s solid financials, optimism about the company’s Artificial Intelligence Platform (AIP), and the stock’s inclusion in the S&P 500 Index (SPX).
The second quarter of 2024 marked the seventh consecutive quarter of GAAP profitability for Palantir. The company’s Q2 revenue grew 27% year-to-year to $678 million, with customer count rising 41% to 593 customers. Moreover, adjusted EPS surged 80% to $0.09, driven by higher revenue and expansion in operating margin.
Given the strong Q2 results and the generative AI-led demand for its software, the company raised its annual revenue forecast 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 price target of $30 following a meeting with Palantir’s CFO Dave Glazer. The analyst noted that the company is optimistic about the momentum in its AIP offering. He also highlighted the large DoD (Department of Defense) deal that closed in the last quarter and helped improve the USG (U.S. government) growth trend into the second half of the year.
Despite these positives, Radke remains on the sidelines on PLTR due to its steep valuation following the rally after the stock’s inclusion in the S&P 500. The analyst also thinks that AIP monetization is still in the early stages despite strong bookings seen in the commercial business. He also expects a “lumpy” government business heading into elections.
Overall, Wall Street has a Hold consensus rating on Palantir stock based on four Buys, five Holds, and six Sells. The average PLTR stock price target of $27.08 indicates a possible downside of 25.4%.
Conclusion
Wall Street is highly bullish about AMD stock but sidelined on Tesla and Palantir stocks. Analysts see higher upside potential in AMD stock compared to the other two growth stocks. Several analysts are optimistic about AMD’s ability to capture generative AI-led demand for advanced chips through continued innovation and strong execution.
