ZACKSยท2025-09-02 17:50Industry Overview - The Internet - Services industry is influenced by macroeconomic factors such as inflation, interest rates, labor markets, and supply chain issues, with a generally positive outlook in a stronger economy [1][6] - Companies in this industry rely on substantial software and hardware infrastructure to deliver services globally, accessible via personal connected devices [5] - The industry operates under two primary models: ad-based and ad-free, with major players including Alphabet, Baidu, and Akamai, alongside emerging companies like Dropbox and Crexendo [6] Investment Opportunities - Dropbox (DBX) and Crexendo (CXDO) are highlighted as attractive investment options due to their growth prospects, AI adoption, and cost-cutting measures [2][17] - The Zacks Internet - Services industry has improved its rank, now positioned in the top 40% of 245 Zacks-classified industries, indicating several opportunities [9][11] Financial Performance - The industry has experienced a net gain of 29.9% over the past year, outperforming the broader Technology sector's 22.2% gain and the S&P 500's 15.6% gain [12] - The forward 12-month price-to-earnings (P/E) ratio for the industry is currently at 21.24X, which is a premium to its median value of 19.76X over the past year but a discount to the S&P 500's 22.8X [15] Company-Specific Insights Dropbox (DBX) - Dropbox has integrated AI into its business to enhance customer experience, leading to a 15.6% increase in share price over the past year [20] - The company beat earnings estimates by 19.5% in the last quarter, with 2025 revenue and earnings growth expected at -2.2% and 7.6%, respectively [20] Crexendo (CXDO) - Crexendo operates in a niche market, providing cloud communication solutions and has seen significant growth opportunities through AI integration [23][24] - The company topped revenue estimates by 2.2% and earnings by 75% in the last quarter, with expected revenue and earnings growth of 10.9% and 9.1% for the following year [26]