Investing.com — A sell-off, partly driven by fears of artificial intelligence disintermediation, has pushed Internet valuations to lows, but Jefferies analysts believe the pessimism has gone too far.
Analyst John Colantuoni argues that “recent developments suggest Internet is evolving into an AI beneficiary, turning the recent sell-off into a buying opportunity.”
Internet stocks have fallen about 30% this year and now trade at a “record 30% discount to the S&P500,” Jefferies said, noting that multiples are also “70% below their ’22 peaks.”
The firm cites several shifts, such as OpenAI moving away from consumer-facing products and scaling back direct checkout ambitions, and Google committing to remain a referral source, as evidence that large Internet platforms will ultimately benefit rather than be displaced.
Against that backdrop, Jefferies has upgraded Expedia Group to Buy, highlighting what it calls an “underappreciated EPS algorithm.”
The firm expects more than three years of 20%-plus earnings growth, supported by “HSD%+ Lodging Bookings growth,” margin expansion and share repurchases. Despite this, Jefferies notes Expedia’s forward P/E remains “~40% below Internet.”
Jefferies also upgraded Instacart to Buy, citing “underappreciated growth engines.” The firm sees at least mid-teens EPS growth for more than five years, driven by accelerating gross transaction value, partnerships, enterprise demand and international expansion.
Jefferies argues that CART’s valuation, which is 25% below the Internet sector, “sits near an all-time low,” even as growth re-accelerates.
These dynamics, Jefferies said, create “attractive entry points” as AI becomes a tailwind rather than a threat.
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