AI Theme-Driven Internet Sector Enters Summer Trading

Overview

This report from JPMorgan is a summary of the internet industry's strategy, titled 'Current Trading Position: Enter the Age of AI', focusing on the market performance and valuation status of the internet sector in North America at the beginning of June 2026. The report highlights that the internet sector is entering a seasonal upward window driven by AI themes, particularly focusing on strong performances in AI application layer companies.

Core views

The report believes that the internet sector has entered the 'Age of AI' trend, with market valuations being re-priced in light of AI commercialization progress. Overall, the sector has risen 1%, with Reddit (+24%) due to expectations of the integration of SHOP, AppLovin (+27%), and Pinterest (+4%) leading AI-related stocks, while Alphabet has seen slight declines (-1%). Valuation-wise, there is structural differentiation: Amazon's 2026 EPS P/E ratio is 29x, Google is 26x, Meta is 19x, all deviating from their historical averages (-11%/+2%/-23%). From the perspective of EV/EBITDA, Google's current valuation is a 31% premium compared to the 2-year average, while Meta's valuation is an 18% discount, reflecting market differentiation in valuations for each company's AI deployment speed and profitability. Overall industry performance is steady, with a 18.8% gain over the past three months and a 12.7% YTD gain, significantly outperforming the S&P 500 (+10.7%).

Analysis framework

The report uses a typical strategy research framework: first, it determines the market position through price momentum (weekly/monthly/year-to-date price changes), relative strength of sectors (vs S&P 500/NASDAQ), and key stock performance, confirming the beginning of the 'summer trading' period; second, it analyzes valuation levels by comparing the P/E multiples and EV/EBITDA ratios of leading companies such as Amazon, Google, and Meta with their historical averages, identifying areas of premium and discount; finally, it traces the driving logic back to the continuous impact of AI themes, particularly highlighting the leading performance of AI application layer companies in terms of business performance and market sentiment.

Methodology notes

• Valuation MethodEV/EBITDA valuation

  Use enterprise value to earnings before interest, taxes, depreciation, and amortization (EBITDA) to measure company valuation levels

  The report repeatedly cites NTM EV/EBITDA indicators, comparing them with the past two or three years' averages to calculate premium or discount levels, providing a critical tool for assessing the relative value of internet companies.

• Industry/Industry Analysis FrameworkPrice/Volume Split

  分解股价变动为量（交易量/资金流）和价（估值/盈利）两个维度

  Although the report does not explicitly mention 'price-volume', the actual analysis path is clear: it first displays price changes (e.g., RDDT +24%), then traces the reasons behind them (SHOP Integration), and supplements them with valuation data (EV/EBITDA), essentially reversing the price change to infer the direction of 'volume' (capital preferences).

Key data

• Internet Sector Weekly Returns+1%S&P 500 +1%, Nasdaq +3%
• Weekly Returns of AI-Related StocksRDDT +24%, APP +27%, PINS +4%驱动因素是业务整合预期与AI应用预期
• 2026 EPS P/E Ratio of Top CompaniesAMZN 29x, GOOGL 26x, META 19xCompared to TTM historical averages, the changes are -11%/+2%/-23%
• NTM EV/EBITDA vs 2-Year AverageGOOGL +31%, META -18%Reflects market differentiation in valuations for AI deployment speed and profitability

Impact & implications

The report suggests that the current internet sector is at the beginning of a mid-term trend driven by AI narratives. Investors should pay attention to stocks with clear AI commercialization paths and valuations not yet overvalued. High returns on AI-themed stocks (such as RDDT, APP) may face short-term fluctuations, while high-valued stocks (such asMETA) may have room for correction. Overall, this trend is structural rather than a全面 bull market, and investors should select companies based on their AI deployment capabilities and profit realization progress.

Risks

• AI commercialization progress is slower than expected, leading to a rapid cooling of the theme
• Valuations among leading companies are increasingly divergent, high-valued stocks face downward pressure
• Macroeconomic liquidity shift may suppress growth stock valuations

What to watch

• Progress of Reddit and Shopify integration and validation of协同效应
• AI income share in subsequent quarterly reports of AppLovin et al.
• Profit margins of giants like Meta after investment in AI infrastructure