Wells Fargo Picks 5 Tech Stocks: MSFT, UBER Lead with Upsides

Key Takeaway

• Wells Fargo highlights Microsoft, Uber, Pinterest, Roblox, and Monday.com as tech stocks with significant upside ahead of earnings.
• Uber's price target raised to $95 by Wells Fargo, indicating a 26% upside due to benefits from recent price increases.
• Microsoft's early adoption of AI through its OpenAI partnership is poised for sustained performance uplift.

Tech Stocks Poised for Growth

As the earnings season accelerates, Wells Fargo analysts have identified a selection of tech stocks they believe are well-positioned for significant upside. Among the highlighted companies are Microsoft, Uber, Pinterest, Roblox, and Monday.com, all of which carry an overweight rating from the firm. This optimism is rooted in various factors, including strategic positioning, market trends, and recent corporate developments.

Uber's Bullish Outlook

Ken Gawrelski, an analyst at Wells Fargo, maintains a bullish stance on Uber as the company approaches its earnings report in early May. Despite a 22% increase in shares this year, Gawrelski sees further growth potential, raising his price target from $90 to $95, indicating a 26% upside. A key factor contributing to this optimistic forecast is the anticipated benefit from recent price increases, which are expected to offset driver insurance premiums.

Roblox and Monday.com: Opportunities Amid Challenges

Despite a 16% decline in 2024, Roblox is viewed favorably by Wells Fargo, with expectations of a rebound following its upcoming earnings report. The firm points to the company's ad platform development as crucial for long-term success. Similarly, Monday.com, with its project-management software, is praised for its growth levers and robust operating profile, making its shares attractive despite the current market conditions.

AI and Strategic Partnerships Drive Optimism

The artificial intelligence (AI) boom continues to be a significant driver of growth for tech stocks. Microsoft, in particular, is lauded for its early mover advantage in AI, thanks to its partnership with OpenAI. This strategic move is expected to provide a sustained uplift in performance. Additionally, partnerships, such as Pinterest's collaboration with Amazon, are seen as pivotal for overcoming monetization challenges and driving future growth.

Challenges and Strategic Moves

While the outlook for these tech stocks is generally positive, analysts acknowledge the challenges and strategic decisions that lie ahead. For instance, Uber's efforts to manage insurance costs, Roblox's ad platform development, and Monday.com's ability to navigate a bumpy macro environment are all critical factors that could influence their trajectories. Moreover, the broader adoption of AI technologies and strategic partnerships will likely play a significant role in shaping the future of these companies.

Street Views

• Ken Gawrelski, Wells Fargo (Bullish on Uber):

  "With favorable market reception to the recent Investor Day & MT [medium term] guide, we don’t expect 1Q results to materially change views... Our data shows Uber likely took price to offset insurance renewals on 3/1, which represents an EBITDA tailwind to 2Q & 2024... We believe the stock is likely to outperform as consensus converges on our estimates over the next 18 months."

• Ken Gawrelski, Wells Fargo (Bullish on Roblox):

  "RBLX shares significantly underperformed in 1Q despite solid FY24 guidance and healthy engagement trends. See stock volatility out of synch w/ fundamentals & expect stock outperformance on an in-line to better 1Q print and guide... Consider cont’d progress with ad platform build-out as critical to the medium/long-term story."

• Wells Fargo Analyst for Pinterest (Neutral on Pinterest):

  "See 1Q print as key to PINS bull case... We believe Pinterest is making the optimal strategic move to outsource monetization to third parties to overcome its attribution and scale challenges. This includes an announced partnership with Amazon, and future expected partnerships with other scaled retail media networks."

• Wells Fargo Analyst for Microsoft (Bullish on Microsoft):

  "Still see MSFT as cleanest way to play AI; note lack of clear competitive alternatives, significant early mover advantage, and lack of material missteps has only extended the co’s differentiation — in our view leaving a clear runway for continued strength vs peers in ’24... Path Well-Paved for Sustained, AI-Driven Uplift."

• Michael Berg, Wells Fargo (Bullish on Monday.com):

  "With a differentiated work mgmt platform, MNDY has a number of robust growth levers to capture market share to drive durable growth... Proprietary Architecture Powering Differentiated & Expanding Platform... Robust & Balanced Operating Profile... Notably, despite the macro impacts partners remain enthused about MNDY’s medium-& long-term trajectory and plan continue making significant investments into their respective practices."