Investment Opportunities Amid Market Sell-off
According to JPMorgan, investors can capitalize on the recent decline in the market by purchasing shares of companies like Meta and Netflix. This year, technology stocks have faced significant challenges following a market downturn that pushed the S&P 500 into correction territory last week, while the Nasdaq Composite is still trading in correction mode, indicating a decline of over 10% from its recent peak.
The once high-performing tech stocks have experienced sharp declines as interest in artificial intelligence waned. Investors are now evaluating weak economic indicators and the shifting news surrounding tariffs and trade policies. In light of these uncertainties, JPMorgan has identified several companies in its internet coverage that appear attractive at their current stock prices, along with others that could serve as defensive options if the economic situation deteriorates further.
Analyst Doug Anmuth mentioned in a note to clients that while the internet sector is primarily consumer-oriented and thus not immune to macroeconomic factors, there are varying levels of resilience. He noted, “By sub-sector, we believe e-commerce, online travel, and digital ads would be most affected by a tougher macro landscape, whereas rides and food delivery, cloud services, and streaming subscriptions could prove to be more resilient.”
Top Picks for Investors
For those looking to take advantage of the downturn, JPMorgan’s preferred investments include tech giant Meta and streaming service Spotify. Anmuth has maintained an overweight rating on Meta with a price target of $727, suggesting a potential increase of 25% from Tuesday’s closing price. He highlighted Meta’s position as the “leading open source AI platform” and anticipated revenue growth driven by upcoming releases like the Llama 4 model.
“We are optimistic about META’s leadership in AI,” Anmuth noted, “and we expect substantial capital expenditures and infrastructure investments to drive revenue trends through 2025.” The factors contributing to this growth include core optimizations and new initiatives in AI, video unification, Reels, and Click-to-Message functionality. Despite a nearly 13% drop this month, Meta’s shares have remained roughly stable year-to-date.
Spotify’s Growth Outlook
Spotify is another stock that Anmuth highlights following the market’s recent downturn, with an overweight rating and a price target of $730. This projection indicates a 29% upside for the stock, which has risen over 27% this year, significantly outperforming the broader market. Anmuth believes the company is on track to fulfill CEO Daniel Ek’s vision for a “year of accelerated execution” aimed at enhancing its music business and improving its services in audiobooks, video, and podcasts.
Defensive Stock Recommendations
JPMorgan also identified Netflix, eBay, and Chewy as defensive stocks worthy of attention in the current market climate. Year to date, Netflix and eBay have increased by 4.3% and 5.3%, respectively, while Chewy has reported a 4.5% loss. Anmuth cautioned that Netflix might see some subscriber churn and advertising challenges if consumer spending slows, but he noted potential advantages for its ad-supported tier as subscribers look for value.
He stated, “We have confidence in Netflix’s content lineup for 2025” and expressed expectations that it would be more resilient compared to previous periods of economic instability, particularly due to its $7.99/month ad tier offering, which provides a high-value option. Regarding eBay, JPMorgan believes the marketplace is well-positioned to manage tariff-related risks better than many in the e-commerce sector. The firm observed that a considerable portion of eBay’s gross merchandise value comes from pre-owned and refurbished products, minimizing supply chain risks and offering consumers lower-priced options.
