Why Amazon, Meta, Mercado Libre and Doordash are this analyst's top internet stock picks

Key Concepts

• Investment Cycles: Periods of increased spending by companies followed by periods of operating leverage and then renewed investment.
• Autonomous Vehicles (Robo-Taxis): Self-driving vehicles, particularly focusing on Waymo and Tesla’s expansion plans.
• AI Transition: Shift from infrastructure investments in AI to quantifiable use cases in enterprise and consumer applications.
• Inventory Turns: A measure of how efficiently a company manages its inventory; higher turns indicate better efficiency.
• S-Curve Adoption: A pattern of growth where adoption starts slowly, accelerates rapidly, and then plateaus.

Investment Outlook for 2026: Top Picks & Driving Forces

The analyst identifies Amazon, Meta, Mercado Libre, and DoorDash as top investment picks for 2026. The common thread among these selections is that they are all currently navigating investment cycles, which have led to periods of underperformance. The expectation is that these investments will begin to yield positive results in 2026, driving stock performance.

Specifically:

• Amazon: Increased spending on AWS (Amazon Web Services) and AI infrastructure is anticipated to translate into accelerated growth in the AWS business, appealing to investors.
• Meta: Currently in the early stages of an investment cycle, Meta’s strong growth is expected to continue. Increased visibility into spending in the second half of 2026 will demonstrate the effectiveness of these investments and drive stock recovery.
• Mercado Libre & DoorDash: Following periods of digestion in 2022 and operating leverage in 2023-2024, these companies are re-entering investment cycles focused on growth. The analyst believes this presents an opportunity for excess returns once these cycles mature.

The Rise of Autonomous Vehicles & AI Impact

The year 2026 is predicted to be a pivotal year for autonomous vehicles, particularly in the US.

• Waymo: Plans to expand into as many as 20 markets in 2026.
• Tesla: Projected to enter 30 US markets by the end of 2026.

This expansion signifies a transition from human-driven activity to robotic operation, offering societal benefits like reduced traffic fatalities. However, the impact on ride-sharing companies is nuanced:

• Lyft: Highly exposed to the impact of autonomous vehicles due to its 90% US-based gross bookings. The analyst anticipates a negative impact on Lyft’s share price as autonomous adoption accelerates.
• Uber: More insulated due to its diversified business, including a significant restaurant delivery service (approximately half of gross bookings) and a substantial international presence. While potentially facing headwinds, Uber is expected to be more resilient.

Regarding Artificial Intelligence (AI), the focus is shifting from infrastructure investments to demonstrable use cases. Meta has been an early beneficiary of AI integration, and more companies are expected to follow suit in 2026, with a growing ability to quantify the returns on AI investments.

Carvana’s Remarkable Turnaround & Industry Dynamics

Carvana’s resurgence from near bankruptcy in 2022 (with a stock price around $4) to its current inclusion in the S&P 500 is highlighted as a remarkable turnaround – a nearly 10,000% return for investors who bought at the bottom.

The key factors driving this success include:

• Capital Build & Competitive Position: Similar to Amazon and Netflix in their early stages, Carvana invested heavily in building its infrastructure and establishing a competitive advantage.
• Direct-to-Consumer Model: Carvana improved the traditionally frustrating used car buying experience by offering a direct-to-consumer model.
• Inventory Management: Carvana significantly outperformed competitors like CarMax in inventory turns, achieving a 35% higher rate. This is crucial in a declining commodity cost industry.

The analyst believes Carvana is poised to continue gaining market share over the next 5-10 years, although acknowledges the substantial stock price increase may limit further immediate gains.

Uber & Lyft Performance Analysis

Uber’s year-to-date performance is described as “tricky,” with initial underperformance due to fears surrounding autonomous vehicles followed by a recovery as the impact of autonomous technology hasn’t materialized yet. Over the past 18 months, Uber’s stock has remained relatively flat.

Lyft, however, is considered more vulnerable to the rise of autonomous vehicles due to its heavy reliance on the US market. The analyst predicts that the effects of autonomous adoption will become apparent in Lyft’s share price in 2026.

Logical Connections & Overall Synthesis

The discussion flows logically from broad investment themes (investment cycles, AI, autonomous vehicles) to specific company analyses. The analyst consistently links company performance to these overarching trends, providing a framework for understanding potential future outcomes. The emphasis on the “back half-weighted” nature of the recommendations underscores the belief that the benefits of current investments will become more visible later in 2026.

Main Takeaways:

The analyst’s outlook for 2026 is optimistic, particularly for companies positioned to benefit from the growth of autonomous vehicles and the increasing monetization of AI. The key is identifying companies currently in investment cycles, as these are expected to deliver significant returns once those investments mature. While acknowledging the risks associated with autonomous technology for traditional ride-sharing companies like Lyft, the overall tone is positive, emphasizing the potential for innovation and growth in the coming year.