Robinhood's Top 10 Stocks: These 2 Stocks Are the Best Buys, According to Wall Street

Trading platform Robinhood keeps tabs on which stocks are most popular with its clients. The top 10 stocks are listed below in descending order. Beside each stock, I have included Wall Street's median target price and the implied upside (or downside) as of Feb. 1.

1. Tesla: The median target price of $474 per share implies 10% upside.
2. Nvidia: The median target price of $250 per share implies 31% upside.
3. Apple: The median target price of $300 per share implies 16% upside.
4. Amazon: The median target price of $300 per share implies 25% upside.
5. Ford Motor Company: The median target price of $13.50 per share implies 3% downside.
6. Microsoft (NASDAQ: MSFT): The median target price of $600 per share implies 39% upside.
7. Palantir Technologies (NASDAQ: PLTR): The median target price of $202.50 per share implies 38% upside.
8. Meta Platforms: The median target price of $850 per share implies 19% upside.
9. Alphabet: The median target price of $350 per share implies 3% upside.
10. Netflix: The median target price of $111 per share implies 33% upside.

Among the 10 most popular stocks on Robinhood, Wall Street sees Palantir and Microsoft as the best buys right now. Here are the important details about each company.

Image source: Getty Images.

Palantir Technologies: 38% upside implied by the median target price

Palantir develops analytics and artificial intelligence (AI) platforms for commercial and government clients. Its software not only helps organizations turn complex information into actionable insights, but also lets them train and deploy machine learning (ML) models that improve decision-making over time.

Last year, Forrester Research recognized Palantir as a leader in AI decisioning platforms, praising the company for its capabilities, overall strategy, and positive customer feedback. And the International Data Corp. ranked the company as a leader in AI-enabled source-to-pay software, which helps organizations optimize supply chain management.

Palantir reported exceptional financial results in the third quarter. Revenue increased 63% to $1.1 billion, the ninth straight acceleration, and non-GAAP (adjusted) operating margin expanded 13 percentage points to 51%. Those values give a Rule of 40 score of 114%, which is unprecedented for a software company. And non-GAAP net income jumped 110% to $0.21 per diluted share.

Palantir stock is down 29% from its record high, but still trades at 230 times earnings. That is an incredibly expensive valuation for a company whose adjusted earnings are forecast to grow at 44% annually through 2026. Morningstar analyst Mark Giarelli says Palantir's revenue would need to grow at 45% annually for the next five years to justify buying the stock today. I think investors should wait for a better entry point.

Microsoft: 39% upside implied by the median target price

Microsoft is the largest enterprise software company. While best known for its office productivity suite, the company also enjoys a strong position in other market verticals, including business intelligence, cybersecurity, and enterprise resource planning. Microsoft is exploiting that strength with generative AI copilots.

The company has integrated generative AI copilots into many of its software products. For instance, Microsoft 365 Copilot automates tasks across office applications like Word, Excel, and PowerPoint. Paid copilot seats increased 160% in the December-ended quarter, and daily active users increased tenfold, according to CEO Satya Nadella.

Microsoft Azure is the second largest public cloud and revenue has increased faster than 30% in 10 straight quarters as the company has benefited from demand for AI infrastructure. Azure is well positioned to maintain that momentum due to its partnership with OpenAI, which affords the company exclusive rights to the models that power ChatGPT through 2032.

Microsoft reported decent financial results in the December quarter, beating estimates on the top and bottom lines. Revenue rose 17% to $81 billion, due to particularly strong sales growth in software and cloud services. And non-GAAP net income increased 24% to $4.14 per diluted share. Yet the stock fell 10% after the report because Azure narrowly missed estimates and capital expenditures increased more than expected.

I have consistently said Microsoft stock looks expensive, but the recent drawdown creates an opportunity. Shares now trade at 27 times earnings. That is reasonable for a company whose adjusted earnings are projected to increase at 14% annually through the fiscal year ending in June 2027, especially because Microsoft beat the consensus earnings estimate by an average of 7% over the last six quarters.

Trevor Jennewine has positions in Amazon, Nvidia, Palantir Technologies, and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Netflix, Nvidia, Palantir Technologies, and Tesla. The Motley Fool has a disclosure policy.