These stocks can benefit the most from lower oil prices, says Jefferies

Jefferies identifies Advanced Micro Devices, Datadog, and Zscaler as key beneficiaries of sustained low oil prices, which have fallen to $68/barrel and are expected to remain subdued, providing a tailwind for U.S. equities, particularly the tech sector. Analyst upgrades reinforce this outlook, with HSBC raising AMD's target to $200 (27% upside) on AI revenue potential, Wolfe upgrading Datadog to Outperform, and Wells Fargo upgrading Zscaler to Overweight with a $385 target (33% upside) citing strong billings growth.

Analysis

A research note from Jefferies posits that persistently low oil prices, which have declined from approximately $80 to $68 per barrel, will serve as a significant tailwind for U.S. equities, particularly within the technology sector. The firm attributes the price weakness to global tariff policies and increased OPEC+ production, and expects this trend to continue. This macro environment has historically corresponded with EPS growth and share outperformance for tech and discretionary stocks. Jefferies specifically identifies Advanced Micro Devices (AMD), Datadog (DDOG), and Zscaler (ZS) as potential beneficiaries. This view is reinforced by recent bullish analyst actions: HSBC upgraded AMD to 'buy' with a $200 price target (a 27% upside), citing undervalued AI revenue potential from its upcoming MI400 series. Zscaler, which has already surged 60% in 2025, was upgraded by Wells Fargo to 'overweight' with a $385 price target (a 33% upside) based on strong billings growth momentum expected to exceed 20% in FY26. Datadog also received an upgrade to 'outperform' from Wolfe Research, fueled by optimism around its AI announcements, though its $150 price target suggests a more limited 3% upside.

Key Decisions for Investors

• Investors should consider the macro thesis that sustained low oil prices could provide a tailwind for non-energy sectors, specifically technology, potentially justifying increased allocation to names with strong fundamental catalysts.
• Advanced Micro Devices and Zscaler warrant close attention for growth-oriented portfolios, as both have received recent analyst upgrades with substantial price target upsides of 27% and 33% respectively, driven by specific catalysts in AI and enterprise billings.
• While Datadog is identified as a beneficiary with positive commentary on its AI strategy, the modest 3% upside implied by Wolfe Research's price target suggests investors might approach it with more caution, awaiting further evidence of its turnaround.
• The core thesis is contingent on oil prices remaining low; therefore, closely monitoring geopolitical factors, OPEC+ decisions, and global tariff policies is critical, as a reversal in crude prices could invalidate the expected tailwind.