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The 5 Big-Cap Internet Stocks With The Strongest Fundamentals

The companies with the best fundamentals among large-cap Internet stocks are Facebook ( FB ), Amazon.com ( AMZN ), Netflix ( NFLX ), Alphabet ( GOOGL ) and Priceline ( PCLN ), says RBC Capital Markets. Internet trends for these top five in their respective sectors — online advertising, retail and travel — remain very consistent, with strong revenue growth year over year, RBC said in a research report. Online advertising seems to be flowing en mass to Google-owner Alphabet and Facebook, with the two now accounting for close to 55% of global online advertising revenue, up from 50% three years ago, says the report from RBC analyst Mark Mahaney. And Amazon continues to show dramatically greater-than-average growth in the online retail sector. “We believe online retail demand trends have remained solid, particularly highlighted by Amazon’s retail sales acceleration,” Mahaney wrote. But, he said, “there’s little ad oxygen for the likes of Yahoo ( YHOO ).” Online travel remains a duopoly of Priceline and Expedia ( EXPE ), while it’s increasingly hard to see anyone catching up to Netflix in terms of video-streaming subscribers, he wrote. Netflix Though shares of Netflix have continued to decline following Q1’s weak international subscriber guidance and domestic price change worries, “We view the fundamental global subscriber growth story as intact,” Mahaney said. Mahaney has a price target on Netflix of 140. Netflix rose 1.4% to 89.12 in the stock market today . The stock is down 20% since reporting first-quarter earnings on April 18, and it’s on the IBD Swing Trader list as a potential short-sale opportunity. Priceline He has a price target on Priceline of 1,600, as growth and profitability trends remain intact. Priceline stock rose 0.4% to 1283.47 on Monday. Priceline is down 6% since reporting Q1 earnings on May 4. Alphabet On Alphabet, Mahaney’s price target is 1,000, as it remains one of the best portfolio plays on the biggest Internet trends. Alphabet stock climbed 0.75% to 730.30 Monday. The stock is down 7% since reporting Q1 earnings on April 21. Facebook On Facebook, the price target is 165, with Mahaney saying the social media company is firing on all cylinders. Facebook stock fell about 1% to 118.67, but it’s up 8% since reporting Q1 earnings on April 27. Facebook is holding above a buy point at 117.09. Amazon The price target on Amazon is 800. Amazon stock edged up 0.1% to 710.68. Still, it’s up 16% since reporting Q1 earnings on April 28. It also is on Swing Trader, but as a long possibility.

Startup Bubble Bursting, Valuations Due For Reset, Analyst Says

A bubble in valuations for private Internet companies is about to burst, according to Silicon Valley provocateur Trip Chowdhry, an analyst with Global Equities Research. “The startup bubble is bursting, the exit value of many startups may be one-fifth of the peak value,” Chowdhry said in a research report Monday. Some startups believed to have qualified as unicorns — meaning they have valuations above $1 billion — will lose that status, he said. IBM ’s ( IBM ) acquisition on March 31 of Bluewolf Group, a provider of cloud consulting and implementation services, could be a benchmark, Chowdhry said. Bluewolf was rumored to be valued at more than $1 billion a year ago, but was likely purchased for about $200 million, he said. IBM didn’t disclose financial details of that acquisition, indicating IBM considers the deal immaterial to its financials, where it almost certainly would give details of any $1 billion acquisition. At $200 million, the acquisition would be just one-fifth Bluewolf’s apparent peak value, says the analyst. Using the Bluewolf deal as a benchmark, enterprise cloud company Nutanix would have a true value of $400 million, not $2 billion as currently believed, the analyst says. Cloud-based software firm Cloudera is probably worth $900 million, not $4.5 billion as venture finance rounds have valued it, Chowdhry said. If other unicorns are revalued at one-fifth their peak valuation, file-hosting service Dropbox and visual bookmarking tool Pinterest are each worth $2.2 billion, not their reported $11 billion. By a similar measure, big data analysis firm Palantir would be worth $4 billion (not $20 billion), accommodations rental firm Airbnb would be worth $5.1 billion (not $25.5 billion), and ride-hailing service Uber Technologies would be worth $12 billion (not $60 billion), Chowdhry said. Chowdhry isn’t alone in calling a bubble in valuations of startups. The Wall Street Journal reported this month that venture capitalists are seeing signs of a bubble getting ready to pop.

Apple Supplier NXP May Beat Tesla Partner Nvidia To Autonomous Car

Apple ( AAPL ) chip supplier NXP Semiconductors ( NXPI ) batted the iPhone slowdown Monday by unveiling a radar, lidar and vision-sending engine that could beat Tesla Motors ( TSLA ) partner Nvidia ( NVDA ) to the autonomous-car punch. The product platform was revealed during NXP’s annual user forum in Austin, Texas, and comes as Nvidia stock has hit record highs the past two trading days on Wall Street after reporting eye-popping Q1 earnings after the close Thursday. Nvidia touted its machine-learning sales for the Q1 beat. Machine-learning, analysts and companies say, will be essential to creating safe, fully autonomous vehicles. NXP’s BlueBox engine incorporates “embedded intelligence and machine-learning required for complete situation assessments,” the company says. On the stock market today , NXP stock rose 2.3%, following its BlueBox announcement, to 84.97, putting it up a fraction for the year. Shares had hit a 19-month low during the February dip that hurt most Apple suppliers. Apple’s iPhone shipment decline has chip investors worried about the next semiconductor frontier, as smartphone sales hit the brakes. But NXP CEO Rick Clemmer recently told IBD that 40% of his company’s revenue stem from automotive sales. For its Q1 ended April 3, 21% of NXP’s sales stemmed from its smartphone segment. The BlueBox engine uses NXP silicon and software at each advanced driver assistance system (ADAS) node and incorporates radar, lidar and vision-sensing to complete a 360-degree world model around the vehicle. “This functionality greatly improves car safety by both managing and preventing emergency situations,” NXP says. And “unlike closed systems focused only on vision and other single-sensor data streams, the NXP BlueBox engine for autonomous vehicle is an open-source platform.” Programmers can customize BlueBox to their specifications, NXP says. The product already is in hands of customers of four of the world’s top five carmakers, NXP says. It has been shipping since September but now is broadly available.