In the midst of a significant surge in internet stocks this year, analyst Mark Mahaney from Evercore ISI remains optimistic about the sector. However, his preferences have shifted. While Meta Platforms Inc. shares were previously his top pick, Mahaney now gives top billing to Uber Technologies Inc.’s stock instead.
Uber’s Strong Growth Outlook
Uber shares have also experienced a notable rise this year, gaining 75% thus far. Mahaney sees Uber as his new number one pick due to its exceptional top-line growth outlook and various potential value catalysts.
Potential Profitability and Inclusion in the S&P 500
One of the key factors contributing to Mahaney’s confidence in Uber is the possibility of achieving profitability based on Generally Accepted Accounting Principles (GAAP) in the second half of the year. Furthermore, a series of GAAP profits could potentially lead to Uber’s inclusion in the S&P 500. With these prospects, Mahaney sets a target price of $75 for Uber shares.
Positive Business Trends for Uber
Mahaney is also optimistic about Uber’s business trends, particularly in relation to a potential recovery in driver supply. In the long run, he believes that Uber is likely to remain relatively resistant to economic recessions from a demand perspective, as commuting remains an essential part of daily life. Additionally, Uber may have a recession hedge from a supply perspective since driving can serve as a quick side-hustle for many individuals.
Amazon.com Inc. Rises in Rankings
Mahaney’s second pick is Amazon.com Inc., which has moved up in his rankings.
In summary, amidst the impressive performance of internet stocks this year, Mahaney sees potential in both Uber and Amazon.com Inc. due to their growth prospects and value catalysts.
Amazon’s Cloud Business Poised for Growth
Industry analyst, Mark Mahaney, believes that now is the time to focus on Amazon. As the company enters a period of easier comparisons and reaches the later stages of its Cloud optimization cycle, Mahaney predicts a promising future for the e-commerce giant.
Notably, Mahaney highlights the potential impact of increased AI workloads on the demand for Cloud compute and storage solutions, where Amazon Web Services (AWS) is currently the market leader. He places a $150 target price on Amazon’s stock.
Additionally, Mahaney has opened tactical outperform calls for both Uber and Amazon shares ahead of their upcoming earnings reports. For Amazon, he emphasizes that the key factor will be an outlook for accelerating AWS revenue growth. While this is seen as more of a possibility than a probability, Mahaney points out that the current share price does not account for this potential acceleration.
Mahaney also mentions his continued support for Meta, although it is no longer his top pick. He describes Meta as the “cheapest of the high-quality ‘Net and Tech Stocks” and believes the company’s three underappreciated product cycles will contribute to solid double-digit revenue growth. Moreover, cost-cutting efforts at Meta are expected to yield positive results. Mahaney sets a $350 target price on Meta’s stock.
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