Companies in the Zacks Internet – Services industry are likely to have witnessed strong financial performance in the second quarter of 2024 due to the rising demand for digital transformation solutions. These companies are benefiting from the growing need for digital services, video content and cloud-based applications.
One of the major industry participants, Alphabet Inc. GOOGL, reported overwhelming second-quarter 2024 results on Jul 23. Apart from beating the Zacks Consensus Estimate, second-quarter revenues and non-GAAP EPS soared 14% and 31%, respectively, on a year-over-year basis.
The outlook for internet services companies is promising, mainly because of the rapid adoption of software-as-a-service (SaaS), which offers a flexible and cost-effective way to deliver applications, reducing deployment time compared to traditional systems. It allows users to access applications anytime, anywhere and on any device.
The industry is also thriving due to the increasing demand for tools supporting hybrid work, educational software, diagnostic tools and cybersecurity applications. The deployment of AI and generative AI is further boosting growth prospects.
Additionally, internet content providers are expanding across social media, connected TV and search platforms to drive revenue growth.
The widespread use of mobile devices makes it logical for businesses to invest heavily in web-based infrastructure, video content, applications and security software. The pay-as-you-go model helps internet companies scale their services according to user needs, while the subscription-based model ensures recurring revenues.
Internet services companies are a crucial component of the broader technology sector. Per the latest Zacks Earnings Trends article, the total earnings of technology companies for the second quarter of 2024 are expected to be up 16.3% from the same period last year on 9.4% higher revenues.
Upcoming Earnings to Watch
Many internet services companies are set to report their earnings results over the next few weeks. Hence, finding internet services stocks with the potential to beat earnings estimates can be daunting. However, our proprietary methodology makes it fairly simple.
You could narrow down the list of choices by looking at stocks that have the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP.
Earnings ESP is our proprietary methodology for determining stocks that have the best chances to surprise with their next earnings announcement. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Our research shows that for stocks with this combination of ingredients, the odds of a positive earnings surprise are as high as 70%.
Top Bets
The three internet services stocks mentioned below have the right combination of elements to beat on earnings this reporting cycle:
Canada-based Shopify Inc. SHOP has an Earnings ESP of +11.37% and currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shopify is scheduled to report its second-quarter 2024 results on Aug 7. The Zacks Consensus Estimate for earnings has decreased by a penny to 20 cents per share over the past 30 days.
Shopify Inc. Price and EPS Surprise
Shopify Inc. price-eps-surprise | Shopify Inc. Quote
San Francisco, CA-based Uber Technologies, Inc. UBER is scheduled to report its second-quarter 2024 results on Aug 6.
Uber Technologies has an Earnings ESP of +4.19% and a Zacks Rank #3. The Zacks Consensus Estimate for earnings has increased by a penny to 31 cents per share over the past 60 days.
Uber Technologies, Inc. Price and EPS Surprise
Uber Technologies, Inc. price-eps-surprise | Uber Technologies, Inc. Quote
VNET Group, Inc. VNET is expected to report second-quarter 2024 results on Aug 28. The company has an Earnings ESP of +60.00% and a Zacks Rank of 3.
The consensus estimate for VNET Group’s earnings has been revised upward by 3 cents to 5 cents per share in the past 30 days.
Vnet Group Inc. Price and EPS Surprise
Vnet Group Inc. price-eps-surprise | Vnet Group Inc. Quote
Zacks’ Top 3 Hydrogen Stocks
Demand for clean hydrogen energy is projected to reach $500 billion by 2030 and grow 5-FOLD by 2050. Want in? Zacks has targeted 3 diversified titans that could lead the way to becoming hydrogen powerhouses.
One has crushed the market over the past 25 years – up +2,400% to +380%.
Another already has capital commitments of $15 billion for low carbon hydrogen products through 2027 alone.
Our third pick soared to 52-week highs in Q4 2023 and has raised its dividend every year for over a decade.
See Stocks Now >>Alphabet Inc. (GOOGL) : Free Stock Analysis Report
Vnet Group Inc. (VNET) : Free Stock Analysis Report
Shopify Inc. (SHOP) : Free Stock Analysis Report
Uber Technologies, Inc. (UBER) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
