The debate over when the Federal Reserve will start to lower interest rates, and the persistence of the artificial intelligence frenzy, are the two key factors that have been influencing the U.S. stock market. Meanwhile, concerns about the course of the economy continue to affect investor sentiment.

Against that uncertain backdrop, Wall Street analysts are focused on identifying stocks with solid fundamentals and strong long-term growth prospects. Investors can look at the recommendations of top analysts to gain useful insights before making any investment decision.  

In that climate, here are three stocks favored by the Street’s top pros, according to TipRanks, a platform that ranks analysts based on their past performance.

Delta Air Lines

We start with Delta Air Lines (DAL), America’s second-largest carrier. DAL reaches more than 290 destinations across six continents via 4,000 daily flights. Following the company’s presentation at the Toronto Corporate Access Day recently held by TD Cowen, analyst Helane Becker reiterated a buy rating on DAL with a price target of $55.

Delta is TD Cowen’s 2024 Best Idea, Becker said, adding, “Delta has a differentiated product in which they continue to invest, but what stands out is their strategic plan.”

Becker believes that management’s focus on DAL’s strategic plan for the past 15 years is delivering the desired results, making the stock attractive. Delta’s stable management team is a key differentiator from its rivals, she said.

Becker highlighted several strengths, including Delta’s extensive network, strategic partnerships with other airlines and operational reliability, reflected in its improved net promoter scores over the past 10 years.  

The analyst also noted Delta’s commentary about continued strength in demand among premium customers (annual income of more than $100,000). Further, the carrier is seeing a solid rebound in corporate travel, with volumes rising by more than double digits on a year-over-year basis. Delta is also strengthening its financial position by continuing to reduce debt.

Becker ranks No. 276 among more than 8,800 analysts tracked by TipRanks. Her ratings have been profitable 63% of the time, delivering an average return of 11.2%. (See Delta Air Lines Stock Charts on TipRanks) 

Microsoft

Our next pick is software giant Microsoft (MSFT). The company, which has invested billions of dollars in ChatGPT creator OpenAI, is viewed as one of the key beneficiaries of the generative AI (artificial intelligence) wave.

Recently, Tigress Financial analyst Ivan Feinseth reiterated a buy rating on MSFT stock and raised his price target to $550 from $475. The analyst believes that Microsoft is “increasingly positioned to lead the AI revolution through the ongoing integration of generative AI functionality throughout its software stack and product portfolio.”

Feinseth noted that Microsoft’s revenue growth of 17% in the fiscal third quarter ended March 31 was driven by the accelerated adoption of the company’s AI-enabled offerings and AI cloud integration. The company’s cloud business delivered robust performance, thanks to the demand for the Azure platform.

Feinseth also highlighted Micrsoft’s growing strength in gaming and efforts to expand into the Metaverse. Notably, MSFT’s gaming business is expected to benefit from the $75 billion Activision Blizzard acquisition and the rollout of the new Xbox gaming console.

Finally, Feinseth mentioned Microsoft’s strong financial position, which supports enhanced shareholder returns and enables investments in the company’s AI ambitions. 

Feinseth ranks No. 242 among more than 8,800 analysts tracked by TipRanks. His ratings have been successful 60% of the time, delivering an average return of 12.2%. (See Microsoft Technical Analysis on TipRanks)  

Zscaler

This week’s third stock is Zscaler (ZS), one of the leading cloud-based cybersecurity players. The company’s Zscaler Zero Trust Exchange platform securely connects users, devices and applications by protecting them from cyberattacks and data loss.

Following the Zenith Live 2024 event, Baird analyst Shrenik Kothari reaffirmed a buy rating on Zscaler stock with a price target of $260. Discussing the key takeaways from the event, the analyst said that Zscaler is trying to capture additional market opportunities by expanding its platform.

In particular, Kothari noted the introduction of the Zscaler Identity Protection feature that capitalizes on advanced machine learning to strengthen identity security across cloud environments. He also mentioned the Cloud Browser Isolation offering that safeguards user devices and the DLP 2.0 solution, which has AI-driven capabilities to ensure the safety of sensitive data.

These new capabilities on Zscaler’s platform have boosted its total addressable market by more than $24 billion to $96 billion. Kothari also emphasized the shift in the company’s go-to-market strategy from a transactional focus to account-centric selling. Under the new sales approach, Zscaler is focusing on adding more customers with an ARR (annual recurring revenue) above $10 million.

“Impressive customer-success stories, particularly in the financial/healthcare/manufacturing sectors, underscore Zscaler’s security-at-scale,” said Kothari.    

Kothari ranks No. 381 among more than 8,800 analysts tracked by TipRanks. His ratings have been profitable 66% of the time, delivering an average return of 20.6%. (See Zscaler Financial Statements on TipRanks)