Goldman Sachs loves Uber, Meta and Amazon — and ranks them in order of preference

Goldman Sachs has named Amazon, Uber, and Meta as three tech stocks that offer the “most compelling risk/reward” looking ahead to the rest of the year.

The Wall Street bank said the Big Tech firms were well placed to “weather a volatile environment” if one were to occur later in 2023, given their established market positions and ability to improve margins.

In a note to clients on May 19, Goldman also ranked the three companies in order of preference.

1. Amazon

Amazon came out on top for Goldman due to its multiple years of stock underperformance following Covid-19 and amid macroeconomic headwinds. The online retailer’s shares are down by 38 per cent since reaching an all-time high in July 2021.

Goldman said consumers who subscribe to Amazon’s Prime service at $US139 ($209) a year have increased their spending, offering downside protection at the company’s largest division by revenue.

The bank added that Amazon Web Services, the cloud computing division, continues to offer multi-year growth opportunities despite near-term challenges.

“With a nod to that market debate, we would focus investor’s attention to what increasingly looks to be a multiple year margin improvement story for AMZN as much a much more material driver of the stock price compounding,” the analysts led by Eric Sheridan wrote in a note to clients.

Goldman Sachs expects shares of Amazon to rise by 43 per cent to $248 a share over the next 12 months. Amazon’s stock closed at $173 on Monday.

2. Uber

Uber, which focuses on transportation services like ride-hailing and food delivery worldwide, comes second on Goldman’s list of “top picks” heading into the year’s second half.

The bank said that Uber is continuing its expansion into delivery services as it recovers from pandemic-related setbacks in its mobility business. According to Goldman, Uber will also be able to gradually raise profit margins by finding “synergies” in its existing services.

Shares of Uber has risen by 58 per cent this year, and analysts’ consensus price target point toward another potential 23 per cent rise over the next 12 months, similar to Goldman’s price target.

3. Meta

Meta, formerly known as Facebook, is third on Goldman Sachs’ list of top picks.

The Wall Street bank is bullish on the stock despite concerns about its long-term growth within an increasingly competitive social media landscape.

Facebook still has unmonetized elements like messaging and short-form video that could drive revenue growth once monetized adequately, Goldman said.

Meta is reportedly launching a new text-based service on Instagram that will compete with Twitter, potentially opening up a new profit stream.

The social media network has previously taken a hit to revenues after changes to Apple’s privacy settings curbed tracking users online.

Shares of Meta are expected to rise by 21 per cent over the next 12 months to $450 a share, according to Goldman.

CNBC