Morgan Stanley: North America Internet – Where Are We Trading Now
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Morgan Stanley updated its assessment of recent price performance and valuation levels across the North American internet sector. As of April 3, 2026, internet stocks collectively surged 7% over the prior week, outperforming both the S&P 500 and the Nasdaq, which gained 3% and 4%, respectively. META and GOOGL led the rally with 9% and 8% gains, while AMZN rose 5%. Smaller platforms also experienced significant upward momentum, including SNAP, RDDT, RBLX, and U.
Valuations for the mega-cap leaders show distinct patterns. AMZN, GOOGL, and META are currently trading at 2026 forward price-to-earnings multiples of 25x, 24x, and 18x, respectively. Compared to their trailing twelve-month averages, these multiples reflect changes of negative 20%, positive 1%, and negative 24%. The digital advertising sub-sector posted a market-cap-weighted weekly gain of 8.3%, followed by e-commerce at 5.3%.
From a broader valuation perspective, the sector's next twelve months EV/EBITDA multiple stands at 12.6x, representing a 12% discount to the five-year average. Conversely, the EV/Sales multiple of 4.5x is 9% above the five-year average. Short interest remains elevated for certain names, with DUOL at 19.7% and LYFT at 17.1%. The report also highlights that treating stock-based compensation as cash significantly impacts digital media EV/EBITDA valuations.