Citi makes Alphabet its top internet pick, replacing Amazon

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Citi Research on Thursday replaced with Alphabet as its favorite stock in the U.S. internet space, citing a plethora of positive catalysts that could take shares of the search giant to new highs.

"We are updating our ranking of most- to least-favored U.S. internet stocks based on recent data points pertaining to company fundamentals, the near-term setup, recent stock performance and investor sentiment. This results in us raising GOOGL to our top pick," equity analyst Mark May wrote in a research note.

The shuffle in rankings caused Amazon to fall to the third spot, while Facebook jumped into second place.

Citi believes there are five key factors that could lead Alphabet to outperform in the months ahead: