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Investing.com -- U.S. internet stocks have rallied strongly heading into second-quarter earnings, helped by modest improvements in gross merchandise volume (GMV) growth and favourable currency movements, according to Bernstein. But the outlook remains uncertain.
“Internet stocks have rebounded sharply along with the broader market,” Bernstein said, noting that “the group feels more own-able into earnings” thanks to modest GMV acceleration and cautious guidance from management teams.
Bernstein has raised estimates and price targets for several names, but warned that the rebound may be fragile. “With multiples back up to (or above) January levels, it’s a tougher question of ‘what next’ coming out of earnings.”
Bernstein pointed to improving credit card data and web traffic as early signs of stabilisation, and said Q3 “could offer some semblance of normalcy.”
But analysts also flagged risks tied to tariffs and Chinese e-commerce competitors. “We may start to feel tariffs soon,” the note warned, adding that “Temu… could return [to U.S. ad spend] at any point,” after pulling back in the second quarter.
Among stocks covered, Bernstein said Amazon (NASDAQ:AMZN) is a top pick, with “top-line acceleration driven by improving performance in core and modest AI-related benefits.”
It also expects eBay (NASDAQ:EBAY) to post “GMV upside vs. guidance once again,” while Etsy (NASDAQ:ETSY) may benefit from “a moderating decline in GMS,” though the durability of the trend remains uncertain.
Overall, Bernstein said the group’s valuation will hinge on GMV trends. “We believe the stocks likely need continued GMV momentum,” analysts wrote. “If GMV is directionally getting better in guidance, we don’t think multiples will be a problem.”