JPMorgan's top internet analyst names his 3 favorite picks for 2024

Published Thu, Dec 14 20236:35 AM EST

JPMorgan is laying out its top internet picks as the new year approaches. "We anticipate our coverage universe will broadly re-accelerate revenue growth to more normalized levels." wrote analyst Doug Anmuth in Wednesday note to clients. "After meaningful cost rationalization in 2023, we believe margin gains will likely be more mixed in 2024," he said. While valuations have bounced back from their 2022 lows, he's bracing for varied performances in the sector as investors focus on fundamentals and execution. Given this setup, Anmuth maintained Amazon as the Wall Street firm's top large-cap pick as revenue growth reaccelerates across the company's Amazon Web Services and retail businesses. Anmuth also expects margins and free cash flow generation to inflect in the new year as Amazon improves logistics efficiencies and advertising, and faces easier year-over-year comparisons. The growth of generative artificial intelligence should also benefit Amazon, with Anmuth expecting AWS to exceed 2023 cloud growth. Year to date, Amazon shares have surged about 77% as Wall Street rotates back into technology stocks. Amazon's also joined the ranks of its megacap peers, laying out new generative AI initiatives, announcing last month a new chip to power AI models . AMZN YTD mountain Amazon shares year to date Along with Amazon, Anmuth favors Alphabet as advertising growth improves and the search giant's Gemini product helps the company close the AI gap. "We believe GOOGL has weaker sentiment & is less owned than other mega-caps, with undemanding valuation below 17x 2025E GAAP EPS of $8.03," he wrote, lifting the firm's price target to $160 a share. The new price target implies more than 20% upside from Wednesday's close. Although Alphabet may face some antitrust resistance, Anmuth expects the outcome to "be less onerous than feared." GOOGL YTD mountain Amazon shares in 2023 Uber is another top internet contender for the new year, with Anmuth bracing for the ride sharing company's inclusion in the S & P 500 to lure a "healthier" group of investors. "We expect Mobility & Delivery demand to remain healthy despite macro headwinds, and for supply tailwinds to further aid growth & profitability," he wrote. Anmuth lifted the firm's price target to $76 a share, implying nearly 23% upside from Wednesday's close. He also highlighted dating company Match Group as another favored 2024 internet play. — CNBC's Michael Bloom contributed reporting