The internet sector, after several years of exceptional returns, is expected to deliver more measured gains in 2026, yet it still contains distinct opportunities for investors, according to Wolfe Research. The firm highlights companies it believes will benefit from sustained AI-related capital expenditure, targeted product catalysts and effective deployment of capital.
Wolfe notes that the sector remains a relative outperformer. Market-cap-weighted gains were 35% in 2025, following increases of 43% in 2024 and 94% in 2023. Despite the outlook for more modest returns versus those headline years, AI-related investment continues to be a central theme - and Wolfe expects that early movers in that investment cycle will likely retain advantages.
Amazon
Wolfe Research projects 2026 will be a standout year for Amazon, framing it as the next big winner after META in 2024 and GOOGL in 2025. The firm expects Amazon Web Services (AWS) revenue growth to accelerate to at least the mid-20% range in both 2026 and 2027. Wolfe's AWS projections exceed Street consensus by approximately $6 billion in 2026 and $13 billion in 2027.
Contributions from model providers are built into the forecast, with Anthropic estimated to add roughly $8 billion in 2026 and OpenAI expected to contribute between $4.5 billion and $5 billion. On the retail side, Wolfe anticipates high single-digit revenue growth supported by faster delivery capabilities, consolidation in online marketplaces and expansion in grocery services.
Operating margin expectations are modestly above consensus, with Wolfe forecasting margins that are 28 basis points higher than Street estimates, driven by automation, growth in advertising and productivity improvements. Valuation on Wolfe's math is roughly 23 times projected 2027 earnings, which the firm characterizes as reasonable relative to peers.
Wolfe also cites a notable AWS contract win: a $581 million cloud award tied to support for the U.S. Air Force's Cloud One Program. In the analyst community, BofA Securities has lowered its price target on the company while other firms, including Bernstein and Evercore ISI, have maintained Outperform ratings.
Meta Platforms
Wolfe ranks Meta Platforms as its second-choice internet pick for 2026. The research house outlines a path to roughly 20% ad revenue growth driven by monetization gains from Threads and WhatsApp, which are expected to provide low- to mid-single-digit billions in incremental revenue. Click-to-message features are estimated to add about $4 billion, and ongoing GEM and Andromeda model improvements are expected to further support advertising performance.
Management guidance on operating and capital expenditures should, in Wolfe's view, clarify the company’s investment cadence in frontier AI model development. Sentiment toward Meta's AI capabilities is expected to improve in tandem with competitive model releases. On valuation, Meta is estimated to trade at about 19 times projected 2027 earnings versus GOOGL at roughly 24 times, offering what Wolfe views as attractive relative value.
Separately, Meta is making a multi-year technology investment to support AI infrastructure: up to $6 billion toward Corning's fiber-optic cable technology through 2030. On the ratings front, Rothschild Redburn upgraded Meta to Buy while KeyBanc reduced its price target.
DoorDash
As its third large-cap selection, Wolfe anticipates DoorDash will modestly outperform gross order value consensus, with low single-digit percentage upside expected. That outlook rests on sustained consumer demand, outperformance from its Deliveroo unit, and deeper grocery penetration.
Wolfe's estimates peg FY2027 EBITDA as potentially coming in about 3% above consensus, bolstered by roughly $150 million of automation-related savings, improved international unit economics and higher order volumes. On a growth-adjusted basis, DoorDash is calculated to trade at about 0.6 times FY2027 EBITDA.
Recent corporate developments include a partnership with athletic retailer Hibbett to enable nationwide on-demand delivery and the appointment of Milan Kovac, a former Tesla robotics executive, to DoorDash's board.
Chewy
Wolfe's top small/mid-cap pick is Chewy, which the firm believes can reach roughly 10% EBITDA margins by the end of 2028. That margin trajectory is expected to be driven by expanding advertising revenue, growth in private-label products, the company's Chewy Health initiatives, automation in fulfillment centers and broader customer value expansion.
Wolfe forecasts continued high single-digit top-line growth through 2026, with drivers including improved marketing efficiency, enhanced customer value creation and cross-selling opportunities. On valuation, Chewy is shown at about 13 times projected 2027 EBITDA, which Wolfe considers reasonable against peers.
Chewy's recent third-quarter results beat consensus for both revenue and EBITDA. The company also disclosed that its chief technology officer, Satish Mehta, plans to retire in February 2026.
Outlook
Wolfe Research frames its 2026 internet sector picks around a common theme: companies that are either direct beneficiaries of AI-related spending or are embedding AI and automation into their operating models to improve margins and scale. While the sector's prior multi-year gains set a high bar, Wolfe's picks reflect areas where execution, product monetization and capital allocation could lead to differentiated returns in the coming year.