TipRanks Smart Growth Portfolio #39: Delivery Breakout
Dear Investors,
Welcome to the 39th edition of the Smart Growth Portfolio and Newsletter.
1
1
Portfolio Changes
❖ We are happy to announce the addition of CommScope (COMM) – which was recommended in our previous Newsletter – to the Smart Growth Portfolio.
We are adding CommScope following its decisive strategic reset and an unusually attractive entry point that may not last. The stock’s recent rally still leaves meaningful long-term upside, and with COMM now emerging as a focused connectivity and networking platform, we see a durable path to compounding returns.
CommScope builds the physical and software layers that move bandwidth across modern networks – the access platforms, fiber-deep systems, virtualized DOCSIS architectures, and cloud-managed wireless infrastructure that keep operators, campuses, and digital enterprises running. After divesting its legacy CCS, OWN, and DAS units, the company is now anchored by two growth engines: Access Network Solutions (ANS), which powers multi-gig broadband rollouts, and RUCKUS, its cloud-managed enterprise-wireless platform. Together, they position COMM squarely in the “picks and shovels” of the nascent data-center and broadband supercycle.
That timing could not be better. Hyperscalers are deploying hundreds of billions of dollars into AI-driven data center expansion, while U.S. operators are entering their most aggressive broadband-modernization cycle in a decade – multi-gig upgrades, DOCSIS 4.0 adoption, cloud-controlled access systems, and full-campus wireless refreshes. Despite its smaller size, CommScope is deeply embedded in this infrastructure wave and was recently named in a federal regulatory filing alongside Arista, Fortinet, Ubiquiti, and Extreme – effectively marking COMM as part of the backbone of U.S. networking infrastructure.
Execution has followed through. The latest quarter delivered powerful continuing operations growth across ANS and RUCKUS, rising profitability, expanding margins, and strong free cash flow generation. With the $10.5 billion CCS sale set to eliminate all debt and preferred equity, CommScope is entering 2026 as a lean, agile platform with far more strategic clarity than at any point in the past decade.
The stock has surged in recent weeks, but upside remains – roughly 25% to the latest consensus target – and we see that as a waypoint, not an endpoint. A refreshed balance sheet, accelerating earnings power, and a business mix tied directly to multi-year connectivity investment create the setup for meaningful re-rating. Management has already restarted buybacks, and as COMM continues to deliver clean quarters and deepen its role in broadband and enterprise modernization, multiple expansion should follow. CommScope’s reinvention is real – and the market is only beginning to price it in.
1
❖ We are exiting Nutanix (NTNX) following its FQ1 earnings miss and full-year guidance reset – not because the company is breaking, but because its growth profile is shifting in a way that keeps near-term sentiment firmly against the stock.
Nutanix is still a strong long-term operator. Bookings were ahead of expectations, VMware displacement remains a durable tailwind, and net-new ARR continues to accelerate. The issue is not demand. It’s timing. A rising share of deals now carry deferred start dates, co-terming, OEM-dependent revenue recognition, or phased migration schedules – all healthy motions for a modern hybrid-cloud platform, but all dilutive to in-quarter revenue. The result was a revenue miss and a cautious reset to FY26 guidance that the market was simply not prepared to absorb.
This is the problem with high-growth stocks entering a more mature phase: expectations don’t adjust gradually. They snap. NTNX has long been valued as a predictable double-digit grower with a clean revenue cadence. The company’s business, however, has become more complex – more OEM mix, more multi-stage deals, more customer flexibility around VMware migration timing. Those shifts improve long-term stickiness but inevitably weaken near-term visibility. Investors responded the way they always do when a “smooth-growth” story gets bumpy: by compressing the multiples all at once.
Nothing about the fundamentals suggests deterioration, but the shape of revenue has changed, and the stock must now go through a full valuation reset before it can move higher again. This won’t resolve in a quarter. Guidance already reflects a more measured top-line path for FY26, and management signaled that deferred-start dynamics will persist – meaning the cadence issues that drove the sell-off are not temporary noise but part of the new operating pattern.
Holding NTNX here becomes a bet that sentiment turns before the narrative stabilizes. While anything is possible, we’d rather step aside now and revisit after expectations, valuation, and revenue timing all realign, creating the foundation for a cleaner upside setup.
Nutanix remains a high-quality cloud platform with a long runway. But in the near term, its evolving business mix and visibility challenges will keep pressure on the stock. We will look to re-enter once the reset is complete and the next durable uptrend starts to form.
1
1
Portfolio News
❖ Applied Digital (APLD) announced the completion of the second phase (50 MW) of Building 1 of its Polaris Forge 1 AI Factory Campus in Ellendale, North Dakota, which is planned to have three contracted buildings with a total critical IT load deployment of 400 MW. The completion of the second phase brings the total operational capacity of Building 1 to its full 100 MW critical IT load. This milestone demonstrates APLD’s execution capability in delivering large-scale AI infrastructure rapidly for hyperscale tenants (such as CoreWeave) at this campus and helps alleviate investor concerns about the company’s ability to scale infrastructure to meet contracted demand on time.
1
❖ Micron (MU) has received another badge of approval, with Morgan Stanley raising its price target from $325 to a Street-high $338 while keeping its “Buy” rating. The new price target indicates an upside potential of about 46%. Morgan Stanley believes that MU is well-positioned to benefit from rising memory prices as supply continues to tighten faster than expected, with DDR5 DRAM (critical for AI applications and servers) experiencing outright shortages.
1
1
Under Review
❖ We are keeping Atlanticus Holdings (ATLC) under review, where we placed it following its Q3 earnings release.
Atlanticus delivered a mixed quarter: portfolio growth remained exceptional, but revenue and earnings fell short. Operating revenue rose 41% year-over-year, but still missed estimates due to a larger-than-expected fair-value markdown on loans. Net income dipped slightly, and adjusted EPS came in below consensus as higher costs and valuation adjustments outweighed strong receivables growth.
The revenue miss was almost entirely driven by the fair-value accounting swing. As assumptions around charge-offs, repayment timing, and discount rates all moved modestly against the company, the present value of the loan portfolio fell more sharply than modeled. That markdown cut into reported revenue even though underlying balances expanded meaningfully, especially with the Mercury Financial acquisition.
Cost and funding pressures compounded the issue, as interest expenses surged due to a heavier debt load and legacy securitizations priced in the high-rate environment of 2023-24. Marketing and servicing expenses more than doubled due to Mercury-related integration and acquisition efforts. While net margin improved year-over-year, it lagged expectations relative to the scale of receivables growth.
Strategically, the long-term shift toward a broader Credit-as-a-Service platform remains intact. The Mercury acquisition expands Atlanticus’s reach into near-prime credit, deepens its dataset, and supports its AI-driven underwriting model, though the transition is compressing margins in the near term. Early credit trends remain within modeled expectations, and portfolio quality is stable.
We continue to view the current headwinds – funding lag, integration costs, and fair-value volatility – as temporary. Receivables growth, both organic and acquired, remains strong, and the macro backdrop is gradually improving as rates decline and credit availability loosens. We expect Atlanticus to show continued top-line momentum, with more meaningful margin recovery beginning next year as higher-cost funding rolls off and mix shifts toward higher-yield segments.
This view was recently upheld by BTIG’s reiteration of its “Buy” rating on ATLC, along with a $105 price target, implying an upside of over 75%. The firm is optimistic about Atlanticus’ business prospects and its ability to capitalize on the underserved consumer credit market, and sees additional valuation upside from the current share price level. Despite these positives and the stock’s strong rebound over the past week, we are keeping the stock under review – maintaining exposure while awaiting tangible evidence to confirm our thesis.
1
1
1
This Week’s Top Growth Pick: Uber Technologies (UBER)
Uber Technologies is a technology company redefining how people and products move across cities, using a single platform to link riders, drivers, couriers, and merchants. What began as a simple way to request a ride has expanded into a broad ecosystem spanning transportation, food delivery, local commerce, and freight coordination – all powered by real-time matching and routing intelligence. Positioned at the center of urban mobility and digital convenience, Uber blends physical movement with software-driven efficiency. Its scale, brand relevance, and constant product iteration give it a durable foundation as cities evolve, consumer habits shift, and automation pushes deeper into last-mile delivery and end-to-end logistics.
1
Takeoff Lane
Uber’s origin story is well known, but the company’s real shift has taken shape over the past five years. The company shifted from a ride-hailing icon into a broader mobility-and-commerce platform built around real-time matching, tighter operations, smarter logistics, and a far stronger technology backbone. The product that once reshaped urban transportation now anchors a wider network stretching across rides, food, local delivery, and enterprise freight.
One of the biggest turning points came through Uber Freight. The 2022 Transplace acquisition didn’t just add scale – it reorganized Freight into a more complete logistics platform, with routing software, managed transportation services, and deeper enterprise relationships. It pushed Uber beyond on-demand brokerage and closer to the infrastructure layer of supply chains.
At the same time, Uber Eats grew from a convenience feature into a major growth engine. The push into groceries, retail, and rapid delivery – paired with national-brand partnerships and improvements in batching and courier matching – made Eats a meaningful contributor rather than a side project. Its rising relevance helped tie Uber’s mobility and delivery ecosystems closer together.
Uber’s tech evolution has been just as important. The company’s long-standing machine-learning platform, Michelangelo, matured alongside newer systems like DeepETA, which sharpened arrival-time predictions across rides and delivery. In 2024, Uber introduced GenAI Gateway, a unified platform for deploying large language models into customer support, automation, safety review, and internal workflows. By 2025, that foundation expanded into Uber AI Solutions – a global data and annotation network that opened Uber’s internal AI infrastructure to enterprises, positioning the company as a provider of real-world training data and tooling for next-generation AI models. These upgrades are increasingly woven into pricing, dispatch, fraud detection, and logistics planning.
Strategic partnerships accelerated that shift. Uber deepened its work with Google, AWS, Microsoft, and Oracle – moving more of its operations into cloud environments built for real-time data and large-scale AI models. On the autonomy side, collaborations with Google’s Waymo and the UK-based Wayve extended Uber’s experimentation with driverless technology without relying on heavy in-house investment, giving the company optionality as autonomous systems advance. More recently, Uber shifted from isolated AV pilots to a multi-partner autonomy ecosystem – integrating vehicles from players such as WeRide, Pony.ai, Baidu’s Apollo Go, May Mobility, and Starship Robotics, and laying the groundwork for future Level 4 fleets through deepened partnerships with NVIDIA and Stellantis.
What ties the story together is the platform model itself. Uber first revolutionized ride-hailing by building an end-to-end system on top of widely adopted consumer tech, redefining how urban movement worked through that pairing. Naturally, the same mechanics it pioneered – smartphones, GPS, and real-time matching – now support a far broader network as it applies that formula to food, commerce, and freight, turning on-demand matching into a flexible system that keeps expanding as behavior, technology, and cities keep shifting.
Source: Uber Technologies, Inc. Q3 2025 Earnings Presentation
1
Multiple Routes
Uber today is a multilayered mobility, delivery, and logistics platform built on a single idea – real-time matching at a global scale. Its business spans three primary segments: Mobility, Delivery, and Freight, with Mobility contributing just over half of revenue, Delivery close to the rest, and Freight a small but strategically useful layer of the portfolio. What ties them together is an end-to-end system of routing, pricing, batching, and data-driven optimization that continues to give Uber an edge in how it connects supply with demand.
Mobility remains the anchor. Uber’s marketplace pairs riders and drivers with minimal wait time, powered by years of demand data, liquidity modeling, and dynamic pricing tuned to geography and time of day. This liquidity flywheel – more drivers reducing wait times, shorter waits attracting more riders, and higher demand drawing in more drivers – is difficult for rivals to replicate. Lyft, regional competitors, and even autonomous-only operators struggle to match this density. Across the U.S., Uber commands well over half of ride-hailing activity in many major markets, and globally it accounts for roughly a quarter of the entire ride-hailing and taxi market. That scale translates into stronger matching efficiency, better asset utilization, and more predictable marketplace economics.
Delivery has matured into a parallel engine. Uber Eats, and its extensions into grocery, convenience, and retail now account for nearly half of gross bookings. Merchant penetration remains low even in top cities, leaving a long runway as independents and retailers digitize ordering and outsource logistics. Grocery is especially valuable – a high-frequency, habit-forming category that deepens engagement across both apps. Uber One links the ecosystems together, with multi-product users spending three times more and retaining far better than single-product users. Yet only about 20% of users in markets with both services use both, a sign of significant untapped upside.
Autonomy and automation are the newest expansion vector. Uber has assembled the broadest AV partnership network in the industry, integrating technologies from Waymo, WeRide, Pony.ai, Baidu Apollo Go, Nuro, May Mobility, Starship Technologies, and the new Stellantis–NVIDIA collaboration. The model remains intentionally asset-light: Uber supplies demand, routing, fleet supervision, and safety operations, while partners supply vehicles and autonomy stacks. Early data shows that cities with AV availability are growing faster than Uber’s broader network, suggesting AVs expand mobility demand rather than cannibalize it. Uber expects to operate in at least ten AV-enabled cities by 2026, positioning itself as the default operating system for autonomous transport rather than a manufacturer of AV fleets.
Layered on top is Uber AI Solutions – a fast-scaling AI data services business that provides multimodal datasets, annotation networks, and simulation environments derived from Uber’s real-world operations. It is emerging as a SaaS-like, high-leverage revenue stream built on proprietary data, global task networks, and the company’s mapping-intensive infrastructure.
Taken together, Uber is no longer just moving people – it is building a platform for how people, food, goods, and eventually autonomous fleets move through cities, with a meaningful runway left in every category it touches.
Source: Uber Technologies, Inc. Q3 2025 Earnings Presentation
1
Highway Network
Uber’s financial story has shifted decisively over the past three years. After posting negative GAAP results as recently as 2022, the company now delivers consistent profitability on both a GAAP and non-GAAP basis, supported by double-digit growth, rising operating leverage, and a cash profile that looks more like a capital-light software platform than a transportation marketplace. It has beaten adjusted EPS estimates in 11 of the past 12 quarters, and Q3 2025 extended that run, surging by nearly 160% year-over-year to $3.11.
Q3 2025 results were strong across the board. Revenue grew 20% year-over-year to $13.5 billion, ahead of the Street’s $13.3 billion estimate. On a non-GAAP basis, adjusted EBITDA reached $2.26 billion, up 33%, landing near the top of guidance and reinforcing the durability of the model. Gross bookings rose 21% to $49.7 billion, topping forecasts, with Mobility and Delivery each outperforming internal expectations. Trips grew 22%, the fastest pace since 2023.
Operating income was the pressure point this quarter, and the only real blemish in an otherwise strong set of results. Uber delivered $1.1 billion in operating income versus the $1.6 billion analysts expected, a shortfall almost entirely explained by an unusual spike in legal and regulatory provisions. These expenses added roughly $500 million to the quarter – the bulk of which stemmed from settlements, reserve adjustments, and regulatory clean-ups tied to older matters rather than anything structural in the business. Management was explicit that most of these charges are not expected to recur, and that underlying unit economics, take rates, and cost discipline all trended in line with – or better than – internal plans.
What really mattered was how the underlying mechanics continued to improve. Adjusted EBITDA margin on gross bookings reached a record 4.5%. Delivery revenue grew faster than Mobility for the first time in several quarters, lifted by strength in grocery and retail. Cross-platform trends also stayed healthy: consumers who use both ride-hailing and delivery spend three times more and retain 35% better than single-product users, a pattern that feeds margin expansion over time. Uber One contributed significantly to gross bookings penetration, with penetration at two-thirds of delivery gross bookings and rising in mobility. The program’s membership stood at 36 million subscribers at the end of Q3, a surge of about 11 million over the past year.
Uber’s cash and balance sheet profile highlight why the business now scales so cleanly. Q3 operating cash flow was $2.28 billion. Capex was just $98 million, an extremely low ratio for a global logistics platform. The result was free cash flow of $2.23 billion, over 16% of revenue, supported by membership revenue and other SaaS-like components that carry minimal marginal cost. FCF margin reached a record 36.3% of revenue, reflecting Uber’s superb cash generation efficiency. The ride-hailing champion ended the quarter with total liquidity is roughly $25 billion – far outweighing its $8.3 billion in long-term debt.
Guidance was solid. Uber expects Q4 2025 gross bookings of $52.25-53.75 billion, up roughly 17-21% year-over-year, and adjusted EBITDA of $2.41-2.51 billion, implying low- to mid-30% growth. The ranges were slightly below analyst expectations on the profit line but above on bookings, reflecting confidence in demand.
Taken together, the numbers point to a company running on a financial engine that is far more durable than its critics assume. Uber is growing at scale, expanding margins, and converting revenue into cash with the consistency of a software platform. It looks less like a cyclically exposed mobility company and more like a compounding machine. It has the liquidity to fund autonomy, the balance sheet to absorb regulatory swings, the operating discipline to stay profitable while doing it, and the cash-rich platform with room to keep compounding.
Source: Uber Technologies, Inc. Q3 2025 Earnings Presentation
1
Peak Delivery
Uber’s closest public peers sit squarely in the U.S. on-demand mobility and delivery space – platforms built on marketplace economics, gig-enabled supply, and real-time matching. Lyft is the cleanest Mobility comp, mirroring Uber’s ride-hailing model across the same urban corridors. DoorDash provides the strongest Delivery benchmark, running the leading U.S. restaurant-delivery network with similar logistics and ad-driven economics. Instacart rounds out the set as the closest analogue to Uber’s grocery and retail push – a high-frequency delivery and ads platform that mirrors Uber’s expansion into local commerce.
Uber’s share price trails only Lyft year-to-date, clocking in a gain of 42%. The stock was running hot into earnings when the operating income miss knocked it down about 16%. Analysts confirmed the positive assessment on Uber, forecasting a potential upside of over 35% for the “Strong Buy”-rated stock – with no downgrades or material price-target cuts post-earnings. Meanwhile, since the miss was an accounting-timing issue rather than business deterioration, the anxious sell-off did long-term investors a favor, creating a far more attractive valuation setup than before the earnings release.
Despite its technological nature, Uber is categorized as an Industrial sector stock, which in most such cases makes sector comps demanding, since Industrials carry lower multiples than technology. However, Uber is now attractively priced versus its sector medians on most metrics. It is also moderately priced compared to peers, with the lowest of all trailing and forward GAAP and non-GAAP P/E ratios. Uber’s trailing and forward Price/Sales, EV/Sales, EV/EBITDA, and Price/Cash Flow sit at or below peer averages. The most striking disconnect between perception and reality is reflected in Uber’s forward PEG of 0.43 – extremely low in absolute terms, roughly one-quarter of its sector median, and significantly below its peers – underscoring a classic GARP setup.
On top of this, Uber is an active buyer of its shares. Having initiated its first-ever share repurchase authorization of up to $7 billion in February 2024, Uber marked a shift from growth-first expansion to a company returning capital to its shareholders while still preserving significant liquidity to invest in scaling and business expansion, thanks to its cash-rich, capital-light business model.
In 2024, the company repurchased about $1.2 billion under the initial plan; the pace accelerated in 2025 with about $2.8 billion in open-market buybacks over the first three quarters of the year. Moreover, in August 2025, Uber expanded its buyback program to a massive $20 billion, which represents over 11% of its market cap. Management stated that it plans to use at least 50% of cash-flow generation over the coming years for share repurchases, and expects to reduce share count by up to 5% over the next two years.
Taken together, the setup is unusually clean for a company of Uber’s scale. The stock now trades at growth-at-a-reasonable-price levels while sitting on strengthening fundamentals, rising cash generation, and a buyback engine that will steadily tighten the float. With multiple legs of the business accelerating and autonomy beginning to show real contribution, Uber enters 2026 with more levers working in its favor than at any point in its public history – a rare combination of momentum, valuation support, and operational clarity that gives long-term investors a sturdier base than the share-price volatility suggests.
1
To Sum It All Up
Uber is entering its strongest growth phase yet – a platform built for an era where mobility, delivery, and autonomy converge into one global network. What began as a ride-hailing disruptor is now a multilayered engine connecting people, food, goods, and soon autonomous fleets with speed and precision. Its advantage comes from scale, data, and liquidity – the mechanics that make matching faster, pricing smarter, and expansion cheaper than rivals can replicate. With Delivery deepening, Mobility accelerating, AV partnerships widening, and a rising layer of high-margin platform services, the business is stacking new growth vectors on top of an already durable core. Despite this shift, the market still treats Uber like a cyclical transport name rather than a platform built to compound across cycles. That disconnect is an opportunity.
1
1
Smart Growth Portfolio
|
1
1
Disclaimer
The information contained in this article represents the views and opinions of the writer only, and not the views or opinions of TipRanks or its affiliates and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy, or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices, or performance.
