Important points
- Despite worries surrounding a potential AI bubble affecting the tech sector, analysts at Jefferies believe that some blue-chip companies with solid fundamentals are likely to thrive.
- They have identified AppLovin, Reddit, Roku, Spotify, Uber, and Zillow as their top internet stock picks for 2026.
Jefferies has some thoughts on where tech investors might want to look, especially given the tough landscape the industry faces.
Last week, tech stocks like Oracle and Broadcom faced setbacks after their quarterly results didn’t impress, contributing to increasing doubt about the AI trade. However, during the selloff, Jefferies analysts reassured clients that they expect some of the sector’s most reputable companies to see gains, pointing to their “peer-leading growth” and robust fundamentals.
Notably, nearly every stock covered by Jefferies has shown strong gains in 2025, outperforming both the S&P 500 and their peers. Here’s what the analysts are suggesting:
Why this matters to investors
The anxiety surrounding an AI bubble has made markets jittery and affected the tech sector recently. While some stocks are performing better than others, investors are left pondering how to spot the winning stocks amidst a crowded field that has seen declines from recent highs.
One company that Jefferies is particularly focused on is AppLovin. Though its stock faced turbulence earlier this year amid allegations from short sellers, it has more than doubled in value in 2025, recently peaking at nearly $725.
Looking ahead, Jefferies has shared that AppLovin intends to implement notable changes in the first half of 2026 to significantly broaden its business by allowing more customers access to its referral-based advertising platform, which could lead to even further gains. Not many on Wall Street are as optimistic about AppLovin as Jefferies, which has set a price target of $860—implying almost a 30% upside from its Friday closing price.
Reddit, Spotify, and Roku have all increased more than a third in value in 2025 and are also among Jefferies’ preferred picks, driven by anticipated new features that could enhance user engagement and positively influence stock prices. Jefferies has set targets of $325 for Reddit and $135 for Roku, which suggest potential returns of around 45% and 33%, respectively. Their $800 target for Spotify indicates about a 26% upside, outperforming consensus forecasts from analysts surveyed by Visible Alpha.
Uber and Zillow complete the list. Uber has surged about 40% since the start of the year, and Jefferies projects it could rise another 40% to $120, thanks to its new partnerships and expansion into previously overlooked demographics contributing to its current momentum.
As of Friday, Zillow faced a decline of about 17% from its September high of over $90 due to concerns about legal challenges, competition, and a sluggish housing market. Nevertheless, it ended the week slightly down from its year-to-date levels before falling further today. Jefferies believes Zillow will fully recover, with a target of $100 as the real estate sector introduces new tools and incentives for agents.
