Uber Rides High with 3% Pre-Market Surge on Strong Financials and NVIDIA Partnership

At the beginning of 2025, the air of macroeconomic uncertainty loomed large over investors, with concerns from Federal Reserve officials about inflation affecting the path of interest rate cuts. Amidst the turbulence, savvy investors looked to shore up their portfolios with financially robust stocks promising long-term growth. In this context, Uber Technologies Inc. emerged as a notable candidate, with its recent financial performance drawing analytical praise.

In the third quarter of 2024, Uber reported revenue and earnings that exceeded forecasts. However, its overall bookings fell short of expectations. James Lee, an analyst from Mizuho, maintained a 'buy' rating on Uber, setting a target price of $90. He expressed confidence that 2025 would mark an investment year for Uber, with growth investments poised to impact the company's EBITDA in the short term but drive long-term expansion. Lee projected a 16% CAGR in core gross bookings from fiscal 2023 to fiscal 2026, in line with Uber's medium to high 10% growth targets. Furthermore, he anticipated that Uber's EBITDA growth would align with analysts' 30% to 40% CAGR predictions, highlighting that economies of scale and efficiency improvements should balance out margin risks.

Additionally, Lee noted that market concerns over Uber's mobility business growth were somewhat overstated. He forecasted a 10% year-over-year growth in total bookings (excluding forex impacts) for fiscal 2025. For Uber's delivery segment, he expected total order volumes to maintain a steady growth rate of around 15%, attributed to the rise of new verticals and preserving market share in food delivery.

Complementing its financial outlook, Uber announced a strategic alliance with NVIDIA Corporation aimed at advancing AI-driven autonomous driving technologies. This collaboration combines Uber's extensive data resources from millions of daily rides with NVIDIA's Cosmos and DGX Cloud platforms. The partnership intends to facilitate the widespread adoption of autonomous technologies by lowering cost and resource barriers within the industry. Dara Khosrowshahi, Uber's CEO, underscored the importance of generative AI as a pivotal force in future mobility, emphasizing the necessity of substantial data support and computational power. This strategic move was favorably received by the market, reflected in a 3% increase in Uber's pre-market trading session on Tuesday.