JPMorgan has issued a comprehensive report on the internet sector, identifying potential winners and losers as macroeconomic changes rattle the market. The bank’s analysts shared their insights with clients on how these changes affect internet-related stocks.
The analysts noted that since the market peak on February 19, stocks in its “Internet coverage universe” have fallen by an average of 14% and they singled out Meta Platforms (NASDAQ: META) and Spotify Technology (NYSE: SPOT) as “the names we like most on the recent pullback.”
For Meta Platforms, JPMorgan noted that the company “has established itself as the leading open-source AI platform,” viewing this as a key strength amid the downturn. Meanwhile, Spotify Technology earned praise for its “Year of Accelerated Execution.” The analysts believe this strategy will drive optimizations in its core Music offerings and bring improvements across Audiobooks, Video, and Podcasts—all of which should support deeper engagement and monetization.
Breaking the sector into subgroups, JPMorgan sees companies involved with rides and food delivery, cloud services, and streaming subscriptions as relatively more resistant to a tougher macro environment. In contrast, the analysts warned that e-commerce, online travel, and digital advertising are more exposed to negative effects from the current conditions.
Online Travel Sector Faces Growing Risks
The firm highlighted online travel as the most vulnerable sector, saying “the secular growth potential is more limited relative to other Internet verticals.” The analysts explained that travel is discretionary for consumers, meaning its “volume & pricing growth” closely follows GDP trends. This connection makes the sector particularly sensitive to economic downturns.
Despite the positive outlook, Meta Platforms (NASDAQ: META) and Spotify Technology (NYSE: SPOT) couldn’t sidestep a tough day in the market. Both stocks ended Tuesday down nearly 5%, dragged by a wider drop across tech stocks.
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