North American Internet: Internet shares gained 1% last week, while AI-linked platform valuations remained below historical EV/EBITDA averages.

Overview

This is a North American Internet market and valuation dashboard. Morgan Stanley reviews recent subsector performance, relative valuation for major platforms, and the effect of treating stock-based compensation as a cash expense in EV/EBITDA analysis.

Core views

Morgan Stanley reports that North American Internet names rose 1% over the week, compared with a 1% decline in the S&P 500 and a 1% gain in the Nasdaq. Alphabet and Meta led the group, each rising 3%, while Amazon declined 1%. Within other Internet segments, Roblox rose 5%, whereas Uber and Booking Holdings fell 2% and 3%, respectively. The exhibit-level performance comparison shows digital advertising outperforming, with a market-cap-weighted gain of 3.1%, while travel declined 2.6% and shared economy declined 2.9%. The report places recent moves in a broader performance context. Its market-cap-weighted Internet universe returned 1.4% over one week, 3.4% over one month, 1.5% over three months, 6.8% year to date, 15.8% over one year and 123.5% over three years. The corresponding Nasdaq returns were 0.7%, 0.9%, 0.0%, 14.1%, 18.0% and 93.5%, while the S&P 500 returned -0.1%, -0.5%, 2.0%, 11.8%, 15.4% and 71.8%. Valuation is a central comparison. Amazon, Alphabet and Meta traded at 19x, 17x and 21x 2026 EPS, respectively, stated as 35%, 33% and 7% below their trailing-average levels. On next-twelve-month EV/EBITDA as of September 18, Amazon was at 10.8x, Meta at 10.4x and Alphabet at 15.0x. Amazon and Meta were at discounts of 15% and 16% to their respective two-year averages, and 17% and 14% below their three-year averages; Alphabet was at premiums of 6% and 11%, respectively. The report also cautions that conventional EBITDA-based comparisons can understate valuation when stock-based compensation is not treated as a cash cost. Applying that treatment increases EV/EBITDA multiples by about 38% on average for digital-media companies, about 26% for e-commerce, about 13% for video games, and about 51% for travel, shared-economy and real-estate-technology companies. Thus, the reported valuation dispersion depends materially on the treatment of stock-based compensation.

Analysis framework

Morgan Stanley compares weekly and longer-term market-cap-weighted share-price performance across Internet subsectors, then benchmarks major platforms’ forward earnings and EV/EBITDA multiples against historical averages. It also recalculates EV/EBITDA conceptually by treating stock-based compensation as a cash expense to show how that accounting choice changes relative valuation.

Methodology notes

• Valuation methodsEV/EBITDA valuation

  Next-twelve-month EV/EBITDA comparison against two-year and three-year historical averages.

  The report uses enterprise-value-to-EBITDA multiples to compare Amazon, Alphabet and Meta with their own historical valuation levels.

• Other

  Treating stock-based compensation as a cash expense in EBITDA-based valuation.

  The report shows that including stock-based compensation as a cost raises apparent EV/EBITDA multiples, changing the interpretation of valuation across Internet subsectors.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Amazon.com Inc (AMZN)

  Major Internet platform included in the report’s performance and historical valuation comparison.

  Strengths

  Its NTM EV/EBITDA was 10.8x, below its two-year and three-year averages.

  Weaknesses

  The shares declined 1% during the reported week.

  Comparison

  Its EV/EBITDA was 15% below its two-year average and 17% below its three-year average.

  Risks

  Stock-based-compensation treatment can raise EBITDA-based valuation measures.

• Alphabet Inc (GOOGL)

  Major digital-advertising platform included in the report’s performance and historical valuation comparison.

  Strengths

  The shares rose 3% during the week.

  Weaknesses

  Its 15.0x NTM EV/EBITDA was above its two-year and three-year averages.

  Comparison

  The multiple was 6% above its two-year average and 11% above its three-year average.

  Risks

  Stock-based-compensation treatment can affect comparability of EBITDA-based multiples.

• Meta Platforms Inc (META)

  Major digital-advertising platform included in the report’s performance and historical valuation comparison.

  Strengths

  The shares rose 3% during the week and its 10.4x NTM EV/EBITDA was below historical averages.

  Comparison

  The multiple was 16% below its two-year average and 14% below its three-year average.

  Risks

  Stock-based-compensation treatment can affect comparability of EBITDA-based multiples.

Key data

• Internet sector weekly performance+1%Compared with -1% for the S&P 500 and +1% for the Nasdaq.
• Alphabet and Meta weekly performance+3% / +3%Both led the Internet group during the week.
• Amazon, Alphabet and Meta 2026 EPS multiples19x / 17x / 21x35%, 33% and 7% below trailing-average levels, respectively.
• NTM EV/EBITDA as of September 18, 2026AMZN 10.8x; GOOGL 15.0x; META 10.4xAmazon and Meta traded below two-year and three-year averages; Alphabet traded above them.
• SBC-adjusted EV/EBITDA upliftDigital Media ~38%; eCommerce ~26%; Video Games ~13%; Travel/Shared Economy/Real Estate Tech ~51%Average increase when stock-based compensation is treated as cash.

Impact & implications

The update indicates that recent Internet performance was led by digital advertising rather than travel or shared-economy stocks. It also shows that apparent valuation discounts for large platforms should be interpreted alongside the material effect of stock-based compensation on EBITDA-based multiples.