Chicago, IL – February 3, 2025 – Today, Zacks Investment Ideas feature highlights Uber Technologies, Inc. UBER, Tesla TSLA and Micron Technology, Inc. MU.
2 Tech Stocks to Buy on the Dip for +35% and +50% Upside
Artificial intelligence stocks went on sale earlier this week after the massive one-day DeepSeek selloff. Wall Street started buying some of the hardest-hit AI ecosystem stocks after shaking off the initial DeepSeek shock in favor of a more pragmatic, wait-and-see approach.
See the Zacks Earnings Calendarto stay ahead of market-making news.
The selloff allowed investors and traders who missed the massive runs from the AI trade to buy stocks at prices and valuations they were trading at months ago.
Some AI-focused stocks including Oklo already clawed back most of their losses in the blink of an eye, leaving investors looking for other tech stocks and AI names to buy on the dip heading into February.
Today we dig into why investors and traders should consider buying Uber and Micron stock at deep discounts. Uber trades 35% below its average Zacks price target, while MU sits 50% below its target.
Is Uber Stock a Must-Buy Down Almost 25% from its Highs?
Uber Technologies, Inc. has tumbled 23% from its October highs, spurred by ‘disappointing’ Q3 gross bookings (+16% to miss estimates by 0.6%). Wall Street is also worried Tesla and others will dominate the robotaxi and autonomous driving future.
Uber’s selloff might be overdone at this point for a variety of reasons, offering investors a chance to buy the tech stock on the dip with its earnings due out on Wednesday, February 5.
Tesla’s robotaxi dreams have yet to materialize. More importantly, Uber will play a significant role in the driverless vehicle revolution across ride-hailing, delivery, and freight/trucking via various partnerships.
Uber’s earnings growth outlook is stellar as it transforms into a stable growth firm set to churn out profits. Uber’s core businesses, ride-hailing and delivery, are especially popular with higher-income consumers who continue to spend despite lingering inflation concerns.
Uber last quarter expanded its multi-year strategic partnership with Waymo to “bring autonomous ride-hailing to Austin and Atlanta, only on Uber.” Uber also announced “five new autonomous partnerships across Mobility and Delivery with Cruise, Coco, Wayve, WeRide, and Avride.”
Uber on January 6 announced a “joint initiative” with Nvidia to accelerate the development of AI-powered autonomous driving technology.
Uber is projected to grow its revenue by 17% in FY24 and 16% in 2025 to reach $50.70 billion—vs. $13 billion in pre-Covid 2019.
Uber’s gross bookings are projected to expand by 18%, roughly matching 2023’s 19% expansion. The company is expected to grow its monthly active platform consumers by 11% to 166 million in 2024.
The ride-hailing giant’s earnings are set to skyrocket 113% to $1.85 a share in FY24 and then jump 29% in 2025. This expected growth comes after Uber posted its first full-year profit as a public company in 2023 by expanding its ride-hailing and delivery businesses while streamlining its operations.
Uber’s earnings outlook has dipped heading into its release. But it crushed our EPS estimate by 192% last quarter and 52% in Q2.
Uber stock has soared 215% off its 2022 lows, posting multiple new highs in 2024. Despite the run, Uber has traded sideways over the past 12 months as it swung wildly. At $66.59 a share, Uber trades 36% below its average Zacks price target and nearly 25% from its October records.
Uber is back above its 50-day moving averages after it found buyers near its 2021 highs and its previous 2024 lows. Uber’s shorter-dated 21-day moving average just crossed above its 50-day, which is a bullish sign.
Uber offers 61% value compared to the Zacks Tech sector with a price/earnings-to-growth or PEG ratio of 0.74.
Even though Uber has dropped nearly 25% from its highs, 37 of the 46 brokerage recommendations Zacks has are “Strong Buys,” with zero sells. On top of that, Uber is committed to returning more value to shareholders via a $7.0 billion share repurchase plan.
Why AI Chip Stock Micron is a Must-Buy Down 40% from Its Highs
Micron Technology, Inc. stock plummeted following its disappointing Q1 fiscal 2025 results and guidance on December 18. The historically cyclical memory chip powerhouse is trading 40% below its June 2024 records as Wall Street recalibrated the stock after it got overheated and saw its EPS outlook fade.
Despite the near-term pessimism, 24 of the 29 brokerage recommendations Zacks has for Micron are “Strong Buys.” The selling represents a wonderful opportunity for traders and longer-term investors to buy Micron stock.
MU jumped 4% on Thursday after finding support near its 52-week lows, its long-term 50-month moving average, and its 2021/2022 peaks. Micron’s bounce pushed it above its 21-month moving average as it still trades at some of its lowest RSI levels of the last five years.
Micron stock is volatile but it roared 960% higher in the past 15 years, leaving its industry’s 85% and Tech’s 660% run in the dust. MU has climbed just 75% in the last five years, dragged down by its second-half of 2024 tumble.
At $92.50 a share, Micron trades 49% below its average Zacks price target. On the valuation front, Micron trades near its 10-year median at 10.9X forward 12-month earnings, representing 60% value compared to the Zacks Tech sector and a 40% discount to its industry.
The recent selloff came even though its AI growth remains stellar. Micron’s AI-heavy data center revenue skyrocketed 40% sequentially and over 400% YoY in its most recent quarter, helping data center sales surpass 50% of its total revenue for the first time.
“We continue to gain share in the highest margin and strategically important parts of the market and are exceptionally well positioned to leverage AI-driven growth,” CEO Sanjay Mehrotra said in prepared remarks.
Micron has predicted AI will drive record memory chip demand, and it’s a key supplier of memory chips for Nvidia’s industry-leading AI processors. MU is projected to grow its revenue by 41% in FY25 and 31% in FY26 to reach roughly $46 billion—adding $20 billion to the top line between its FY24 and FY26.
Micron is projected to grow its adjusted earnings by 430% in FY25 and 59% next year. This growth outlook includes Micron's wave of downward EPS revision since its December release, with its FY25 consensus 20% lower and FY26 13% off the pace.
Thankfully, its current negative earnings revisions have largely been priced into Micron stock.
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