Uber, Amazon[ticker symb=AMZN] and DoorDash are the top large-capitalization stock picks for internet industry analysts at Evercore ISI, according to a new analyst note late Thursday.
Evercore ISI analyst Mark Mahaney wrote that he remains "constructive on the internet sector" heading into 2025. But a strong 2024 overall for the sector is limiting opportunity for earnings multiples to expand significantly next year, he added.
"While the internet sector may still contain 1-2 stocks that can materially re-rate and compound in 2025, we see most of the potential outperformance in 2025 coming from compounding – i.e. multiples will largely hold, and the stock prices will rise in conjunction with the growth in underlying earnings," Mahaney wrote.
With that in mind, Mahaney stuck by the top three large-cap stocks he picked following the third quarter earnings season last month. But he highlighted factors that could drive their performance in 2025.
Uber Stock: Projecting A Rally
Mahaney said Uber stock has suffered a 30% pullback following its third quarter report in late October. The stock has been hit by concerns about competition from Waymo and Tesla's robotaxi plans. Bookings growth also missed the mark during Uber's Q3.
"We continue to believe that Uber, as the ultimate ridesharing demand aggregator, will be a net beneficiary of robotaxis," Mahaney wrote.
Meanwhile, Mahaney added that Evercore expects mobility bookings growth to "stabilize" in the first half of next year, helped by moderating insurance costs and easier year-over-year comparisons, among other factors.
Uber Chief Financial Officer Prashanth Mahendra-Rajah said at an investor conference Wednesday that he expects the company's mobility business to be a "high teens, low 20s grower for at least the first few quarters of 2025."
Mahaney holds a price target of 120 on Uber, nearly double the stock's price on Friday.
DoorDash, Amazon Stock Top Picks
Amazon, meanwhile, has rallied 23% since its late October earning report. But Mahaney sees further room for Amazon stock to go, helped by accelerating revenue growth for its cloud business and expanding margins for the e-commerce business.
"Q3 was a profitability inflection point for Amazon and the shares haven't looked back," Mahaney wrote. "And we don't think they will going forward either."
He set a price target of 260 for the tech behemoth's stock.
Mahaney, meanwhile, sees DoorDash as also reaching a "probability inflection point" following its third quarter results. The September-ended quarter was DoorDash's first profitable one as a public company.
The food delivery company's push into markets beyond restaurants and the U.S. should help power further growth, in Mahaney's view.
"DoorDash is seeing no material signs of consumer softness," Mahaney wrote.
Evercore ISI has a price target of 200 for DoorDash stock.
Wild Cards To Watch
However, the Evercore ISI included a list of potential "wild cards" that could affect the biggest internet stocks covered by Mahaney's team.
That includes the potential ban of TikTok, which could be a "significant positive" for Meta Platforms, Alphabet and Snap.
It is still not clear how far President-Elect Donald Trump will push tariffs on imported goods. But tariffs represent a "pending negative catalyst" for Amazon, Mahaney wrote, with Meta and Google also exposed for their exposure to Chinese e-commerce companies for advertising revenue.
On the other hand, Evercore expects that the Trump administration will bring a less restrictive merger and acquisition policy. That could lead to some smaller internet firms becoming acquisition targets, as there is a "persistent dislocation between large and (small and mid-) cap valuations," Mahaney wrote.
Amazon Stock Near Highs
On the stock market today, Amazon stock lost a half-percent to close at 227.46. Shares hit a record 231.20 Thursday before pulling back slightly.
Uber stock lost 2.4% to close at 59.94. Uber was also named a top 2025 pick on Friday by analysts at Goldman Sachs.
DoorDash stock fell a half-percent to close at 175.09. Shares are testing their support at the 21-day moving average line, according to MarketSurge.
