RBC's top Internet stock picks

While Internet stocks may have largely disappointed this year, RBC Capital Markets sees brighter times ahead for the sector in 2015.

"Valuations now are more attractive across the group, not in every name but across the group, than they've been in about 18 months," Mark Mahaney, RBC's lead technology analyst, told CNBC on Friday.

RBC's top pick for 2015 is Amazon.com, which underperformed this year.

"The market is very negative on their ability to ramp margins and to reaccelerate revenue growth. And the market may be right but that's what's priced into the stock here," Mahaney said in an interview with "Squawk Alley."

"So we think you can win as an investor with either one of those … working higher."

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Amazon wasn't alone in underperforming in 2014. According to a recent RBC note, only five of the 18 mid- to large-cap stocks outperformed the market this year and 16 of the 20 small-caps had negative returns.

Netflix comes in as No. 2 on RBC's most attractive Internet stocks for next year.

While some investors may be concerned about how negative reviews of Netflix's original content may affect the stock, Mahaney isn't worried in the long term.

"They don't need every show to be a hit. What they are going to try to do is appeal to a bunch of different demographics—and they've got a broader range of demographics than anyone out there—so they can win with singles and doubles. They don't need home runs."

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Shares were initially down Friday morning after critics panned Neflix's newest drama, "Marco Polo," but recovered in midday trading.

At No. 3 is Facebook, still one of the most attractive growth-adjusted valuations in the group, according to RBC's note.

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RBC likes Yelp, Shutterstock and Pandora Media for small-cap names in 2015.

—CNBC's David Montalvo contributed to this report.

Disclosures: Mahaney and RBC have no disclosures found for Amazon.com, Netflix, Yelp, Pandora Media. A member company of RBC Capital Markets or one of its affiliates received compensation for investment banking services from Facebook in the past 12 months. A member company of RBC Capital Markets or one of its affiliates managed or co-managed a public offering of securities for Facebook in the past 12 months. RBC Capital Markets is currently providing Facebook with nonsecurities services. RBC Capital Markets has provided Facebook with investment banking services in the past 12 months. RBC Capital Markets has provided Facebook with nonsecurities services in the past 12 months. Disclosures for Shutterstock could not be immediately obtained.

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