The fact that the internet has become ubiquitous is hardly a revelation for many regular 24/7 Wall St. readers. The one constant factor from year to year is that there is always change, and change often leads to greater practicality and ease of use for consumers. With 2017 underway, and a new administration headed to the White House for the first time in eight years, that one constant of change is a big factor again.
In a research report released earlier this week, Jefferies outstanding internet analyst Brian Fitzgerald highlighted 10 top themes for the internet for 2017, and some of those are directly related to Donald Trump becoming president.
While this research report is a broader piece in terms of the areas covered, the analyst notes in the report that he is positive on Amazon.com Inc. (NASDAQ: AMZN), Alphabet Inc. (NASDAQ: GOOGL), Facebook Inc. (NASDAQ: FB) and Criteo S.A. (NASDAQ: CRTO). The team also remains very positive on the gaming sector, which is a technology segment on which Jefferies has been ahead of the pack in coverage for years.
Here are the 10 top internet themes for 2017 from Jefferies:
1) Fulfillment/Last Mile Logistics – Last-mile logistics will continue to grow in importance as interest in expedited delivery services rises. Amazon.com, Inc. (current leader in eCommerce fulfillment) has been building internal logistics capabilities which have given them an edge today, and helps disrupt another billion-dollar market tomorrow.
2) Trends in Online Advertising – Video and mobile ads continue to be key drivers of growth in 2017 with TV & auto ad spend slowly transitioning to programmatic processes. Brian anticipates healthy mrgeres and acquisitions activity within the AdTech space as companies attempt to expand their AdTech capabilities through strategic investments.
3) Large Mobile and ESports Video Games Will Attract Advertising and Sponsorship Dollars – The emergence and rapid adoption of new digital business models (and positive impact to profitability) has been one of the most important trends in the video game sector. The analysts believes 2017 will see two additional revenue streams in advertising and sponsorship’s.
4) The Repeal of Net Neutrality – Net neutrality will likely be repealed under the Trump administration leading way to preferred “fast lanes” for content providers.
5) Travel and the Sharing Economy – The analyst believes sharing economy services addresses a separate segment of the market with moderate overlap with traditional products. Demand is often incremental to traditional travel products and ultimate winners will be one-stop booking platforms with the broadest product offering.
6) Rise of the Bots/Personal Assistant Technology – Amazon and Google are well positioned players as they attempt to take advantage of the growing demand for personal assistant devices/tech.
7) Virtual Reality – The Drive For Content Begins – Conversations around virtual reality will shift from the quality of the systems being deployed to the content being released.
8) Autonomous Driving Emergence Continues – The development of the tech is still relatively early innings, strides are being made towards full automation.
9) Make America Repatriate Again – The analysts has 27 companies under his coverage with a combined $80 billion of cash held overseas.
10) Hacking Becomes More Prevalent – But Will Consumers Care? – Headlines will highlight personal security however without a major financial incident. Consumer confidence in e-commerce will not contract.
The bottom line for investors is we are in for decades of titanic change with regards to the internet and all things related, which already has expanded dramatically over the past decade.
Two of the most important areas the Jefferies analyst focused on, net neutrality and the repatriation of billions of overseas dollars, are directly related to the new Trump administration, and they could prove to be huge positive not only for the companies involved, but for our nation’s economy as well in the years to come.