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Investing.com -- Morgan Stanley raised estimates across its U.S. internet coverage on expectations of a more favorable macro backdrop and lower China tariffs, upgrading Pinterest (NYSE:PINS) to Overweight and Etsy (NASDAQ:ETSY) to Equal Weight.
Amazon (NASDAQ:AMZN) remains the firm’s top pick, while Alphabet (NASDAQ:GOOGL) is favored over Meta (NASDAQ:META) in the near term due to valuation.
Brokerage expects GPU-enabled innovation and accelerating GenAI product adoption to drive revenue upside for the sector, with second-half earnings seen as a key catalyst.
Amazon’s AWS reacceleration is a central thesis for its continued outperformance, with analysts pointing to signs of cloud growth stabilizing and investor focus shifting toward 2026 EPS potential above $8. The firm’s price target of $300 implies around 33% upside.
Alphabet is also seen benefiting from AI-driven monetization and disclosure improvements, though Morgan Stanley (NYSE:MS) cautions that the “search debate” may linger into the second half.
It sees potential catalysts in GenAI engagement metrics and possible DoJ remedy developments tied to a Gemini partnership with Apple (NASDAQ:AAPL). Its price target of $205 suggests modest upside of 11%.
Meta’s GenAI product pipeline remains key to justifying ongoing heavy investment, the note said, though the stock’s valuation, trading at roughly 23 times 2026 earnings, makes near-term upside more limited.
The firm raised its 2026 capex forecasts for both Meta and Alphabet by double digits, modeling a 21% year-on-year increase in aggregate “Big 4” data center spending to $392 billion.
Pinterest, upgraded to Overweight with a $45 price target, which is about a 21% upside, was highlighted for its underappreciated earnings power and growth potential, driven by GPU-backed engagement and monetization gains.
Etsy was lifted to Equal Weight on what the firm called a balanced catalyst path heading into earnings.