Citigroup Is Bullish on Amazon and Airbnb Even as Rate Fears Cloud Tech

(Bloomberg) -- Citigroup Inc. analysts say the U.S. internet sector is healthy, naming Amazon.com Inc. and Airbnb Inc. among their top stock picks, despite the pressure on technology valuations from the surge in bond yields.

The call comes as the Nasdaq 100 Index is off to a stuttering start in 2022, with growth stocks like Netflix Inc. spiraling as the short-term boom from the pandemic fades. Investors have pulled back from tech stocks because of higher interest rates, sky-high valuations and mounting concern about an economic slowdown.

“Should a (mild) recession occur we believe its impacts are likely to be manageable,” analyst Ronald Josey wrote in a note, naming DoorDash Inc. and Snap Inc. as the firm’s other favorites in the sector. “The broader sector is healthy as consumer engagement online continues to be more immersive and grow.” 

What’s more, an online survey by Citi in the U.S. showed that people are more online than ever, the analyst wrote. The findings include a 67%-plus jump in social media usage from pre-pandemic levels and 43% of responders are still using food delivery at least once a week.

Airbnb should benefit from the ongoing recovery in travel demand, while Amazon is “best positioned” in e-commerce, online advertising and cloud, Citi added.

In the internet deep-dive note, Citi also gave Peloton Interactive Inc. a buy rating and called it its “most controversial pick.” It said the user experience is difficult to recreate and that the recent price reductions should prove appealing.

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