Internet_ 2025 Survey Says!...Investors Expect Another Year of Internet Outperformance; GOOG_L Favorite Mega Cap; UBER Leads Large Caps, & RDDT & Z_ZG Lead SMID; Focus on GenAI Innovation. Sun Jan 12 2025

Summary of J.P. Morgan's 2025 Internet Sector Survey Industry Overview - Industry: Internet Sector - Date: January 12, 2025 - Survey Participants: Nearly 100 investors Key Findings Market Performance Expectations - US Internet Sector: ~79% of respondents expect market-cap weighted Internets to rise more than 5% in 2025, with 38% anticipating increases of 15% or more [2][5] - S&P 500: Only ~66% expect the S&P 500 to increase by more than 5% [2][5] Economic Outlook - Recession Probability: ~76% of respondents believe there is a 25% or less chance of a recession in 2025 or the first half of 2026 [2][5] Tailwinds for the Internet Sector 1. Advances in Technology & Innovation/New Products: 17% [7][25] 2. Return on AI Investments: 14% [7][25] 3. Upward Earnings Revisions: 13% [7][25] Headwinds for the Internet Sector 1. Lack of AI Monetization: 19% [7][30] 2. Heavy Capex/Margin Compression: 17% [7][30] 3. Unattractive Valuation: 17% [7][30] Generative AI Expectations - New Applications: 37% expect compelling new GenAI agents and applications [2][36] - Revenue Contribution: Only ~6% expect material revenue contributions from GenAI/LLMs [2][36] Stock Performance Predictions - Best Performing Internet Stock: GOOG/L is expected to be the best performer among Internet Mag 7 stocks with 43% of respondents [2][46] - Worst Performing Internet Stock: META is anticipated to be the worst performer with 46% of respondents [2][49] - Best Performing Large-Cap Stock: UBER is expected to lead with 40% [2][56] - Best Performing Mid-Cap Stock: RDDT is expected to lead with 22% [2][61] - Best Performing Small-Cap Stock: Z/ZG is expected to lead with 18% [2][67] - Best Performing Sub-Sector: Subscription-Based Companies (26%) and Online Ads (23%) are expected to perform best [2][77] Investor Preferences - Rideshare/Food Delivery: UBER is preferred by 51% of respondents [2][81] - Online Travel: BKNG is favored by 38% [2][81] - Video Games: RBLX and TTWO are both favored by 28% [2][81] Turnaround Stories - Best Turnaround Stories: UBER (31%), PINS (16%), and ABNB (15%) are viewed as the best turnaround stories for 2025 [2][81] Additional Insights - Investor Composition: 55 Long Only, 30 Hedge Fund, and 5 Others participated in the survey [2][5] - Survey Timing: Conducted from January 3 to January 10, 2025 [2][12] This comprehensive survey provides a positive outlook for the Internet sector in 2025, with significant expectations for growth driven by technological advancements and AI investments, despite some concerns regarding valuation and profitability.