This Stock Is on My Radar Amid Mixed Market Action
As economic uncertainties increase and AI trade shakes up on Microsoft news, I'm watching this ride-sharing company closely.
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Market action is mixed on Wednesday morning, with the small-cap Russell 2000 index (IWM) driving positive breadth but big-cap technology suppressing the senior indexes. A report that Microsoft (MSFT) is lowering some AI software sales forecasts is hurting the AI sector, but the response is mixed as investors are still trying to sort out the AI winners from the losers.
Concern remains about the slowing economy and sticky prices. But at the same time, the high likelihood of a Fed interest-rate cut next Wednesday is keeping a strong bid under the market. Trump Administration officials are out today with optimistic forecasts for the economy in 2025, but affordability remains a significant problem. Virtually all consumer sentiment measures are hitting lows last seen in the summer of 2022, when inflation first exploded. The middle class is struggling to find jobs, and the cost of living is not going down. Inflation has slowed, but that doesn't mean that prices are declining. They just aren't going up as fast.
The economic uncertainties, combined with a reassessment of who the winners of the AI race are, are making for a challenging market environment. The good news is that smaller stocks continue to attract interest as investors seek good values and unextended charts, but pockets of sustained upside momentum are very narrow.
I'm having a tough time finding anything that I want to buy aggressively at this point. Stocks are trying to hold recent support levels, but they are not offering much near-term upside.
I want to be much more aggressive with some buys, but the opportunities just aren't there. The Russell 2000 is setting up very nicely, but we need some new leadership groups to emerge. Biotechnology has been on a roll lately, but after some big moves, it needs a rest.
One name I'm contemplating is Uber Technologies (UBER) . The stock has been hit hard primarily over concerns about self-driving threats, but some analysts think those concerns are overblown.
Arete upgraded Uber to a buy from neutral with a price target of $125, up from $82, according to TheFly.com.
"The firm believes investor concerns over competition from autonomous vehicles are overdone," according to TheFly. "The autonomous vehicle providers outside of Tesla (TSLA) cannot manufacture an affordable vehicle at scale, the analyst tells investors in a research note. Arete adds that with the majority of Uber's gross bookings coming from consumers with over $100,000 in annual income, the company has less consumer spending risk compared to peers."
The stock has bounced strongly since hitting $82 last week, and I'm waiting for it to settle before I stick my toe in and put it back on the radar. UBER is growing revenue at about 20% recently and has a trailing P/E of around 16, so its valuation is favorable.
I'm going to keep working on my watch list, but I don't expect to do any buying right away.
At the time of publication, DePorre had no position in any security mentioned.
