Analysts at Bernstein highlight positive storylines for key internet stocks in 2024, with Amazon (AMZN) and Meta (META) receiving an optimistic rating. The bank maintains an overweight rating for Amazon and Meta, as well as for Uber (UBER) and DoorDash (DASH).
Despite the late 2023 rally, many internet stocks enter 2024 trading at higher multiples. Bernstein analysts caution that "fundamentals now have to live up to the stock moves," emphasizing the need for selectivity.
The emerging narratives for 2024 include the continued ascent of Temu and Shein in U.S. e-commerce. Mark Shmulik, lead analyst at Bernstein, notes that the debate has shifted from whether these platforms will stay to "How much share can these entrants capture? And from whom?" Meta benefits from the increased ad spending by Temu and Shein, potentially impacting Google, Pinterest, and Snap positively.
Etsy and eBay face direct challenges from Shein and Temu, while Amazon, with its robust defenses, adjusts its strategy by reducing fees for clothing sellers. The analysts suggest that 2024 marks a return to more robust growth levels after the pandemic-induced boom-bust cycle.
Bernstein favors Amazon, Uber, and DoorDash for their potential to generate free cash flow. Meta's execution capability and its new addressable markets in Reels short-video products and click-to-message chat advertising contribute to its positive outlook.
Looking ahead, the next topical theme driving internet stock debate remains uncertain. Bernstein's report suggests a continuation of interest in generative artificial intelligence, with investors seeking new use cases and revenue streams.
Despite potential challenges, Amazon emerges as the analysts' top pick, with a 12-month target price of 175, indicating a 17% upside. In recent trading, Amazon stock is marginally down at 149.59, while Meta stock is down 0.5% at 344.40.
