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JP Morgan has identified Meta Platforms (NASDAQ:META) and Spotify Technology (NYSE:SPOT) as strong buys following a 14% pullback in internet stocks since February 19. The broader S&P 500 is down 8% in the same period, but analysts believe these two companies have resilient business models and strong fundamentals to weather economic headwinds.
Meta remains JP Morgan’s top pick, thanks to its leadership in AI and the upcoming launch of Llama4, expected to boost ad revenue and long-term growth. The firm reiterated its Overweight rating and maintained a $725 price target, with 2025 capex projected at $65 billion (+73%) and $76 billion (+18%) for 2026. Analysts expect growth to come from AI-driven ad optimizations, Reels monetization, and Click-to-Message initiatives. Meta's advertising strength remains a key factor, with performance-driven ad spend making up over 80% of its revenue.
Spotify is also a top recommendation, with 14% revenue growth projected for 2025 and 2026. JP Morgan expects gross profit to rise 20%, operating income to jump 47%, and free cash flow to grow 24%, justifying a premium valuation. Analysts believe its investment in Music, Podcasts, Audiobooks, and Video will drive deeper user engagement and higher monetization.
For investors seeking defensive plays, JP Morgan points to Netflix (NASDAQ:NFLX), eBay (NASDAQ:EBAY), and Chewy (NYSE:CHWY). Netflix benefits from strong user engagement and a growing ad-supported tier, while eBay and Chewy thrive on focus categories and non-discretionary sales.
As the market navigates uncertainty, Meta and Spotify stand out for long-term growth potential, while defensive stocks offer stability in a downturn.
