Industry Overview - The Zacks Internet - Delivery Services industry is facing challenges due to macroeconomic uncertainty, inflationary pressures, and high interest rates, which are expected to negatively impact demand in the near term [1][2] - Companies in this sector are experiencing increased costs from aggressive hiring and heavy investments in sales and marketing, which may affect margins [2] Growth Opportunities - Despite current challenges, companies like GoDaddy, MakeMyTrip, and QuinStreet are well-positioned for growth by adapting to changing consumer preferences and expanding into emerging markets [3] - The rise in smartphone usage and improved internet access are creating significant opportunities for the industry, with 4G and emerging 5G technology enhancing user experiences [5] Consumer Trends - A shift in consumer preferences towards convenience and online services is expected to benefit the industry, particularly in food ordering and travel booking [6] - However, overall industry health is closely tied to consumer spending, which may be affected by economic slowdowns [6] Technological Advancements - Innovations such as smart routing algorithms and real-time GPS tracking are enhancing customer experiences and operational efficiencies, providing a competitive edge to early adopters [7] Risks from Tariffs - The industry may face indirect impacts from tariff wars, which could lead to reduced spending from small businesses and startups, ultimately affecting revenue growth and margins [8] Profitability Challenges - High upfront costs associated with expansion strategies may hinder profitability, especially as competition intensifies from major tech companies like Amazon and Alphabet [9][10] Industry Performance - The Zacks Internet - Delivery Services industry ranks 201, placing it in the bottom 17% of nearly 250 Zacks industries, indicating dim near-term prospects [11][12] - The industry has underperformed the S&P 500, declining 24.5% over the past year, while the S&P 500 and broader sector have increased by 15.1% and 19.6%, respectively [16] Valuation Metrics - The industry is currently trading at a forward 12-month price-to-sales (P/S) ratio of 1.41X, significantly lower than the S&P 500's 5.18X and the sector's 6.37X [19] Company Highlights - **GoDaddy (GDDY)**: Focused on cloud-based technology products for small businesses, benefiting from strong momentum in its Applications & Commerce business and expanding global footprint [24][25] - **MakeMyTrip (MMYT)**: Leading online travel agency in India, capitalizing on the booming travel industry and expanding middle class, though facing a downward revision in earnings estimates [29][31][33] - **QuinStreet (QNST)**: Positioned to benefit from the shift to online business models, with an upward revision in earnings estimates reflecting positive ad spending trends [35][36]

Core Insights - GoDaddy Inc. is a leading provider in internet domain registration, web hosting, and online business solutions, with a market cap of $16.8 billion, serving millions of entrepreneurs and small businesses globally [1][2] Financial Performance - GoDaddy's stock has decreased by 41.9% from its all-time high of $216 on January 30, and has dropped 12.8% over the past three months, underperforming the S&P 500 Index, which increased by 1.8% during the same period [3] - Year-to-date, GoDaddy's stock prices have plunged 36.4%, and 39.5% over the past 52 weeks, while the S&P 500 has gained 14.3% in 2025 and 11.1% over the past year [4] - Following the release of Q3 results on October 30, GoDaddy's stock prices rose over 5%, with total revenues growing 10.3% year-over-year to $1.3 billion, exceeding expectations by 2.8% [5] - The company reported a 14.4% growth in EPS to $1.51, surpassing consensus estimates by 67 basis points [5] - Total bookings increased by 9% to $1.4 billion, which has positively influenced investor confidence [6] Competitive Position - GoDaddy has significantly underperformed compared to its peer, VeriSign, Inc., which has seen 17.5% gains year-to-date and 24.5% returns over the past 52 weeks [6]

Core Viewpoint - Digital Realty Trust is currently underperforming compared to the S&P 500, but it has significant potential to benefit from the AI megatrend in the coming years [1][2]. Company Overview - Digital Realty Trust owns over 300 data centers and serves more than 5,000 customers, including major tech companies [2][9]. - The company has a market capitalization of $55 billion and a current dividend yield of approximately 3% [7]. Data Center Comparison - Not all data centers are equal; Digital Realty's facilities are designed for general uses like web hosting and cloud computing, rather than specialized AI workloads [5][4]. - AI data centers, equipped with advanced technology like Nvidia's GPUs, are currently outperforming general data centers in the market [5][12]. Strategic Initiatives - Digital Realty is retrofitting existing data centers and constructing new AI-focused facilities, a process that may take up to 18 months [8]. - The company is positioned to leverage its extensive customer base and existing relationships with tech giants to secure future contracts [9][10]. Future Outlook - By 2030, Digital Realty is expected to have a significant number of AI data centers operational, which could enhance its cash flow and market position [10][11]. - The potential for exponential revenue growth exists once sufficient AI data centers are established to support long-term contracts [12][13]. Investment Consideration - Digital Realty Trust is viewed as a "show me" stock, with potential for growth in the long term, making it a possible buying opportunity for investors [11][14]. - The company offers a relatively stable investment compared to high-flying AI data center operators, appealing to those seeking lower risk with potential for significant upside [14].

Company Overview - GoDaddy Inc. (GDDY) is a leading internet services company based in Arizona, with a market cap of $18.1 billion, specializing in domain registration, web hosting, website building, online marketing, and digital commerce tools for small businesses and entrepreneurs. The company was founded in 1997 and serves over 20 million customers while managing more than 80 million domain names worldwide [1]. Earnings Projections - GoDaddy is expected to release its Q3 2025 earnings on October 30, with analysts projecting earnings of $1.50 per share, representing a 13.6% growth from $1.32 in the same quarter last year. The company has surpassed Wall Street's bottom-line estimates in two of the past four quarters while missing on two occasions [2]. - For fiscal 2025, analysts forecast an EPS of $5.84, marking a 20.4% increase from $4.85 reported in fiscal 2024. In fiscal 2026, earnings are expected to grow 22.1% annually to $7.13 per share [3]. Recent Performance - In the second quarter of fiscal 2025, GoDaddy reported revenue of $1.22 billion, an 8.3% year-over-year increase, exceeding Wall Street's estimate of $1.20 billion. The company's EPS rose 39.6% year-over-year to $1.41, also surpassing analysts' expectations of $1.34 [5]. - However, shares of GoDaddy fell about 3% after the announcement of ceasing operations as the registry service provider for the .CO top-level domain, which is expected to create a 50-basis-point headwind to bookings and revenue, primarily impacting the fourth quarter [6]. Stock Performance - GoDaddy's stock has declined 18.8% over the past 52 weeks, underperforming the Technology Select Sector SPDR Fund's 23.6% surge and the S&P 500 Index's 14.4% uptick during the same time frame [4]. Analyst Ratings - Analysts maintain a moderately optimistic view on GoDaddy, with an overall "Moderate Buy" rating. Out of 18 analysts covering the stock, there are nine "Strong Buys," one "Moderate Buy," and eight "Holds." The mean price target of $191.60 suggests a 44.7% upside potential from current price levels [7].

Industry Overview - The Zacks Internet - Delivery Services industry includes companies providing services through Internet-based platforms, such as food delivery, online travel booking, and web hosting [2] - The industry is characterized by growth-stage companies investing heavily in R&D and sales & marketing, which may hinder short-term profitability [2] Growth Drivers - Increased smartphone usage and improved Internet access are driving growth in the delivery services sector, with 4G and emerging 5G technology enhancing user experiences [3] - Shifting consumer preferences towards convenience and online services are expected to benefit the industry, particularly in food ordering and travel booking [4] - Technological advancements, such as smart routing algorithms and real-time GPS tracking, are improving delivery efficiency and customer experience [5] Challenges - Persistent macroeconomic uncertainties, inflation, and high interest rates pose significant challenges to the industry [1] - Higher upfront costs associated with market expansion may negatively impact profitability, especially as competition intensifies from major tech companies like Amazon and Alphabet [7] - The potential fallout from tariff wars could indirectly affect revenue growth and margins due to reduced spending from small businesses and startups [6] Industry Performance - The Zacks Internet - Delivery Services industry has underperformed compared to the S&P 500 and the broader Computer and Technology sector over the past year, gaining only 0.2% [11] - The industry currently holds a Zacks Industry Rank of 103, placing it in the top 42% of approximately 250 Zacks industries, indicating solid near-term prospects [9][10] Valuation Metrics - The industry is trading at a forward 12-month price-to-sales (P/S) ratio of 1.64X, significantly lower than the S&P 500's 5.44X and the sector's 7.1X [14] Company Highlights - **GoDaddy (GDDY)**: Focused on cloud-based technology products, benefiting from strong momentum in its Applications & Commerce business, with a Zacks Consensus Estimate for 2025 earnings revised upward by 2.2% to $6.05 per share [17][18][19] - **Vipshop Holdings (VIPS)**: An online discount retailer in China, improving its financial performance through enhanced product offerings and a focus on high-margin apparel businesses, with a current-year earnings estimate revised upward by $0.05 to $2.44 per share [23][24] - **QuinStreet (QNST)**: A provider of online marketing services, positioned to benefit from the shift to online business models, with a fiscal 2026 earnings estimate remaining unchanged at $1.05 per share [27][28] - **Asure Software (ASUR)**: A cloud computing firm focusing on human capital management solutions, with a 2025 earnings estimate revised upward by $0.02 to $0.79 per share [31][32]