How is the Q3 performance outlook for Internet stocks? Piper Sandler is optimistic about Google, Pinterest, and more

Piper Sandler released its forecast for internet stocks in preparation for the third-quarter earnings season. The research firm expressed the most optimism for Google (GOOGL.US), Pinterest (PINS.US), and Reddit (RDDT.US), while maintaining a cautious stance on Amazon (AMZN.US) and Snap (SNAP.US).

The research firm added that Google is its top pick, with an expected third-quarter revenue of $86.5 billion and operating profit of $26.5 billion. "Ad checks are positive, and the integration of Gemini with search has driven higher spending through increased efficiency. We believe antitrust concerns have been reflected in the stock price. Additionally, we like the new CFO Ashkenazi and see opportunities to reduce operating costs/headcount."

Amazon remains Piper's top pick in the large-cap space, but the research firm had mixed feelings about the stock's prospects at the time of the report. They forecast Amazon's third-quarter revenue to be around $157 billion (10% year-over-year growth) with an operating profit of $14.8 billion. For the fourth quarter, revenue is expected to be between $180-186 billion, with EBIT between $16-18 billion. "The third-quarter guidance breaks the growth in profit margins, with Wall Street's expectations for the company's NTM EBITDA declining for the first time in five quarters. On the advertising front, our buyers note that Amazon still has the best attribution, but the lack of inventory growth driving higher CPC is a further constraint on spending."

For Pinterest, Piper believes it is worth buying the stock and expects third-quarter revenue to be $892 million (17% year-over-year growth) with EBITDA of around $212 million. "Indeed, the stock feels like it's taking two steps forward, one step back, despite a drop of over 25% from its high point, execution is still ongoing. Surveys show that product changes are driving better engagement, and we like the new CAPI/AWS features."

Piper forecasts Meta's (META.US) second-quarter revenue to be around $40 billion (16% year-over-year growth) with EBITDA of $20 billion. "Our checks are once again positive, as the performance of Advantage+Reels is improving, and Instagram remains strong for e-commerce. The year-over-year data for the first quarter of 2025 is the most challenging, but Meta has guided for 23% growth in the third quarter."

Regarding Reddit, the company stated that due to strong user growth, improving advertising manager data, and the lowest incremental profit expectations compared to peers for 2025-2026, they believe it is worth buying the stock.

As for Snap, Piper mentioned that while company data for Snapchat+ indicates a faster growth rate in the third quarter, the results are still mixed.

On eBay (EBAY.US), Piper noted that despite its 48% growth year-to-date, its valuation remains compelling at around 10 times NTM EBITDA With the increasing possibility of GMV growth in the second half of the year, we still believe it is worth buying the stock. In addition, since the first quarter of 2022, the growth of GMV in the United States and non-brick-and-mortar retail has been improving, and Wall Street's expectations now imply a slowdown