|
|
|
|
|||||
|
|
|
New: Instantly spot drawdowns, dips, insider moves, and breakout themes across Maps and Screener.
Fourth-quarter 2025 earnings for Internet stocks were significantly influenced by accelerating artificial intelligence adoption and massive infrastructure investments. Major tech companies substantially increased capital expenditures, with Meta nearly doubling spending to $115-$135 billion for 2026 to support AI initiatives. AI-driven demand fueled strong revenue growth, particularly benefiting software analytics companies and cloud computing providers. Strong advertising demand and improved AI-powered recommendation algorithms also boosted revenues for social media platforms, while enterprise AI adoption accelerated across commercial and government sectors.
This is evident from the strong results delivered by Meta Platforms META. Meta Platforms' fourth-quarter performance is likely to have benefited from increasing AI-infusion across its services, which currently reach more than 3.58 billion people daily. META’s improved recommendation system is driving up user engagement. AI usage is making META a popular name among advertisers.
Drawing on our proprietary research and market insight, we’ve identified four stocks — Akamai Technologies AKAM, Five9 FIVN, Fastly FSLY and Spotify Technology SPOT — that appear well-positioned to beat earnings estimates this season.
The fourth quarter witnessed Internet stocks navigating a complex landscape shaped by both supportive and challenging dynamics. The artificial intelligence buildout boom remained a primary catalyst, as hyperscalers and technology companies accelerated capital expenditure plans to secure competitive positioning in AI infrastructure. Accelerated AI integration across platforms emerged as a significant driver, with companies demonstrating meaningful progress in monetizing AI capabilities through enhanced search functionality, content creation tools, and personalized user experiences.
Digital advertising markets showed resilience, benefiting from improved targeting technologies and measurement capabilities that enhanced return on investment for advertisers. Cloud infrastructure demand continued to expand as enterprises accelerated digital transformation initiatives, supporting Internet companies with significant cloud computing divisions.
The Federal Reserve's monetary easing cycle that began in September continued to support growth-oriented Internet stocks, creating a more accommodative financial environment. Seasonal market patterns also played a favorable role, with historically strong fourth-quarter performance trends providing positive technical momentum for equity markets.
However, tariff-related uncertainty continued casting shadows over the quarter. Trade tensions persisted despite some bilateral agreements, creating concerns about cost pressures and supply chain disruptions. Software application companies faced particular challenges as concerns mounted about AI disruption threatening traditional business models, leading to underperformance within the broader technology sector.
Meanwhile, advertising-dependent business models faced potential pressure from economic deceleration concerns, raising questions about sustained capital expenditure levels by major cloud providers. The quarter ultimately reflected a tug-of-war between transformative technological opportunities and prudential concerns about execution risks, valuation sustainability, and macroeconomic headwinds, requiring investors to carefully balance growth potential against mounting uncertainties.
With the presence of several industry participants, finding the right software stocks with the potential to beat on earnings can be daunting. Our proprietary methodology, however, makes this task fairly simple.
You could narrow down your choices by looking at stocks that have the perfect combination of two key elements — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP is our proprietary methodology for determining stocks that have the maximum chances of beating estimates in their next earnings announcement. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
Our research shows that for stocks with this favorable mix of ingredients, the odds of a positive earnings surprise are as high as 70%.
Given below are four Internet stocks that have the favorable combination to beat on earnings this reporting cycle:
Spotify Technology is scheduled to report fourth-quarter 2025 results on Feb. 10. The company currently has an Earnings ESP of +12.83% and a Zacks Rank #3. The global rollout of the enhanced free tier continues attracting millions of incremental users, strengthening MAU growth and engagement. Price increases across 150+ markets demonstrate solid pricing power with steady retention rates, supporting premium revenue expansion. Video podcast consumption surged 54% year over year, while AI-driven personalization improvements enhance user experience and monetization potential. Gross margin expansion reflects operational efficiency gains and favorable licensing dynamics. Management forecasts fourth-quarter revenues of €4.5 billion (approximately 13% year-over-year growth), 745 million MAU, 289 million subscribers, 32.9% gross margin, and €620 million operating income, underscoring continued platform strength and profitability trajectory. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for earnings has moved south by 6.3% to $2.95 per share in the past 30 days.
Spotify Technology price-eps-surprise | Spotify Technology Quote
Fastly is set to to report fourth-quarter 2025 results on Feb. 11. The company currently has an Earnings ESP of +5.88% and a Zacks Rank #3. The upcoming results are expected to benefit from accelerating security revenue momentum and successful cross-sell initiatives across its edge platform. The company's multi-product strategy has driven notable customer expansion, while international growth in the Asia Pacific and Europe markets strengthens geographic diversification. Network services consumption trends and platform innovations, including API discovery and next-generation WAF capabilities, position Fastly for continued market share gains. Management guides fourth-quarter revenues to be in the range of $159-$163 million, with non-GAAP EPS of 4-8 cents and gross margins near 61.5%. Full-year 2025 guidance projects $610-$614 million in revenues with $9-$13 million non-GAAP operating profit, marking Fastly's profitability inflection.
The Zacks Consensus Estimate for earnings has remained steady at 6 cents per share in the past 30 days.
Fastly, Inc. price-eps-surprise | Fastly, Inc. Quote
Akamai Technologies is slated to report fourth-quarter 2025 results on Feb. 19. The company currently has an Earnings ESP of +1.97% and a Zacks Rank #3. Fourth-quarter 2025 results are expected to benefit from robust momentum across high-growth segments. Cloud Infrastructure Services revenues are likely to have accelerated with 40-45% annual recurring revenue growth, fueled by major contract wins and AI-driven edge computing demand following the Akamai Inference Cloud launch. Security revenues should continue delivering double-digit growth, supported by strong API Security and Zero Trust solutions adoption, while strategic partnerships with Deutsche Telekom and the achievement of FedRAMP High Ready status expand market opportunities. Additionally, delivery revenue stabilization and operational efficiencies driving non-GAAP operating margins toward 30-31% position the company for solid profitability alongside accelerating cloud transformation.
The Zacks Consensus Estimate for earnings has remained steady at $1.75 per share in the past 30 days.
Akamai Technologies, Inc. price-eps-surprise | Akamai Technologies, Inc. Quote
Five9 is scheduled to report fourth-quarter 2025 results on Feb. 19. The company currently has an Earnings ESP of +1.59% and a Zacks Rank #3. Strong backlog conversion from new logo wins and installed base bookings should fuel sequential revenue growth toward the guided $297.7 million midpoint. Enterprise AI revenue momentum, which surged 41% year over year in the third quarter, appears poised to continue driving subscription growth as enterprises increasingly adopt AI-powered contact center solutions. Profitability expansion should persist with adjusted EBITDA margins expected around 23%, benefiting from disciplined cost management and operational leverage. The company's $50 million accelerated share repurchase program, which is completing before quarter-end, supports earnings per share accretion, with non-GAAP EPS guidance of 78-80 cents reflecting Five9's improving financial profile.
The Zacks Consensus Estimate for earnings has remained steady at 79 cents per share in the past 30 days.
Five9, Inc. price-eps-surprise | Five9, Inc. Quote
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
This article originally published on Zacks Investment Research (zacks.com).
| 7 min | |
| 13 min | |
| 22 min | |
| 57 min | |
| 2 hours | |
| 2 hours | |
| 2 hours | |
| 2 hours | |
| 2 hours | |
| 2 hours | |
| 2 hours | |
| 2 hours | |
| 4 hours | |
| 4 hours | |
| 4 hours |
Join thousands of traders who make more informed decisions with our premium features. Real-time quotes, advanced visualizations, backtesting, and much more.
Learn more about FINVIZ*Elite