Wedbush analysts, led by Scott Devitt, have provided their outlook for the internet industry in 2024. According to the analysts, leading consumer internet platforms are well positioned for the future, with rising margins and improving growth rates in eCommerce and digital advertising.
For 2024, the analysts have identified Amazon.com Inc (NASDAQ: AMZN) in the eCommerce vertical and Meta Platforms Inc (NASDAQ: META) in the Digital Advertising vertical as their top ideas.
The analysts anticipate more normalized growth rates for both eCommerce and digital advertising in 2024, with both industries set to accelerate next year. In the U.S., eCommerce penetration of total retail is expected to rise by 99 basis points, while digital advertising’s share of U.S. media spend will increase by 230 basis points to approximately 77%.
Retail media is highlighted as one of the fastest-growing segments of digital advertising, with an estimated growth rate of around 22% in 2024.
Within Wedbush’s coverage rankings, Alphabet Inc’s Google (NASDAQ: GOOGL) has been lowered to the second position in Digital Advertising, while Meta has been raised to the top spot. The analysts believe that 2024 will present some challenges for Google due to factors such as the deceleration of Google Cloud, uncertainty surrounding AI initiatives, and the unknown impact of generative AI on Search.
Amazon remains the top pick for Wedbush analysts across their internet coverage. The company is said to be well positioned for 2024, with rising retail margins, accelerated growth in AWS, and outperformance in advertising revenue.
Wedbush maintains an Outperform rating on Amazon with a price target of $210. The analysts project FY24 revenue of $641.59 billion, slightly higher than the consensus estimate.
Meta is expected to benefit from improved monetization of new products such as Reels and click-to-message features. Reels is predicted to provide a modest boost to revenue in 2024, and short-form video spending is expected to increase. Additionally, the analysts believe that new generative AI features like Meta AI and AI avatars on Facebook and Instagram can potentially drive engagement in 2024 and beyond.
Wedbush reiterates an Outperform rating on Meta and raises the price target from $350 to $420. The analysts project FY24 revenue of $150.42 billion, slightly lower than the consensus estimate.
Google is viewed as a long-term winner in the digital advertising industry, with broad exposure and a durable market share of overall media spending. The company is expected to experience modest margin expansion in 2024 as growth accelerates in an improving industry environment.
Wedbush maintains an Outperform rating on Google with a price target of $160. The analysts project FY24 revenue of $340.07 billion, slightly lower than the consensus estimate.
In recent trading, Amazon’s shares were up 0.15% at $153.35.
(Note: This article is a rewrite of the original content and does not change any names or quotes from the original text.)