JPMorgan released its picks for the internet sector in 2024. These picks include Amazon (AMZN), Uber (UBER) and Alphabet (GOOG,GOOGL). J.P. Morgan cites reasonable valuation, proven profitability, and potential for growth as its reasons for picking those stocks.. Yahoo Finance Anchors Brad Smith and Seana Smith break down the stocks and what it could mean for them going forward.
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Video Transcript
BRAD SMITH: Also, JP Morgan is out with its call for the internet sector in 2024, saying it’s keeping Amazon as the one top large cap pick for the upcoming year, along with a slew of other big names. And the reason, according to JP Morgan data, the internet sector has rebounded from its 2022 lows, and significantly outperformed the market in 2023, with its coverage universe up 35% year-to-date.
There you’re taking a look at some of their key picks here. And we mentioned Amazon. One of the big themes that they’ve pointed out in their internet themes here. More stable normalized growth, margin gains, more mixed after some of the cost reduction efforts that have come forward over the course of this year. And then public cloud shifting from optimizations to acceleration.
Oh, yeah. You couldn’t go without mentioning generative AI. Year two is what they’re just summarizing it at. They’ve, got high expectations, but still a lot to prove here.
SEANA SMITH: They do. And also following in that investment criteria is just the fact that they still believe that these companies are at reasonable valuations. They prefer solid growth, proven profitability. A theme that we’ve been talking about with a number of strategists that have joined us here at “Yahoo Finance” over the last several weeks, as we look ahead to some of these top picks for 2024.
We hit Amazon. What also stuck out to me is what they had to say about Google. That that is a new top pick for the company. They’re basing it on improving ad growth. Something that we have been closely tracking here. So they see that continuing– that trend continuing here, as you look ahead to 2024.
Also some of those larger margins, generative AI, that gap that they’re seeing. The tightening of that gap is what they’re expecting into 2024. And that positions Google well. And then Uber was an interesting pick to me, just in terms of the fact that we are seeing some pressure on some of these consumer facing names as consumers do pull back on spending. But JP Morgan making the case here, at least, that Uber remains a top pick because of its strength and profit focus. And they do see some of that momentum. They expect mobility and delivery demand to remain healthy, despite some of these macro headwinds.
And you can see year-to-date, Uber has shot right up. Up just about 150%. Far outperforming their competitor Lyft. Obviously, very much, at least, the Street consensus is much better positioned given their diversified business, when you compare it to a name like Lyft.
BRAD SMITH: My goodness. You’re looking at a PE ratio that’s double, essentially, what NVIDIA. And the year that has been for NVIDIA is looking like over at Uber there. So a PE ratio that we were seeing of about 120 a moment ago here, as I was checking things very briefly. But I think more interestingly, the mobility growth normalizing post recovery, that was interesting call out for Uber in this note.
Tyler Fields is your internet guru, delving into the latest trends, developments, and issues shaping the online world. With a focus on internet culture, cybersecurity, and emerging technologies, Tyler keeps readers informed about the dynamic landscape of the internet and its impact on our digital lives.
